Beauty Salon Feasibility Study in the Los Angeles-Long Beach-Anaheim, CA Metro Area

Small shops, a bigger-than-usual ticket, and a hard loss record

Los Angeles-Long Beach-Anaheim is one of the country's busiest places for salon lending, 3 of 546 areas for beauty salon loans, yet within the area the class is only 9 of 39. The location quotient of 0.72x confirms that salons take a lighter slice of local approvals than the national average, and still the median loan of $138,300 is 1.38x what a salon borrows at the median nationwide. From FY2017 to FY2026 SBA approved 322 loans for salons here, worth $87.0 million.

Who borrows and how

Half of all loans fall between $35,000 and $275,000, which marks this as lending at the small end of SBA's range. SBA 7(a) accounts for 311 of the loans and SBA 504 for 11. Franchised salons are 10.2% of loans. Los Angeles County has 223 loans and Orange County 99. The pattern over time is a trough and a rebound: only 11 loans in FY2021, then 48 in FY2024, 52 in FY2025 and 47 in FY2026, the last year reaching $12.4 million.

The loss figures that set this page apart

This cell's most important numbers are not its sizes but its charge-offs. Among the 114 Los Angeles salon loans approved FY2017 to FY2021 and later paid out, no less than 17.5% have been written off so far, and 11.4% had gone that way by the five-year mark. Both of those percentages are minimums, as open loans may yet default. Salon approvals from FY2017 through FY2024 were cancelled after approval at a rate of at least 11.2%, while one companion rate, the cancellation ceiling, is held back by SBA's source and shown with no number, which is not the same as none.

Lenders on SBA's list

All five named holders are 7(a) lenders: U.S. Bank, National Association with 46 loans and $4.4 million, Wells Fargo Bank National Association with 29 and $2.2 million, Lendistry SBLC, LLC with 17 and $2.1 million, Bank of Hope with 15 and $2.0 million, with JPMorgan Chase Bank, National Association on 15 loans but just $1.7 million. Dollars per loan are small throughout. The listing records only what SBA shows as held, and it implies nothing about any bank's view of salons.

Testing a Los Angeles beauty salon

With losses like these, salon projects call for a study that is sober about revenue. It should show how many chairs or suites the site supports, whether the operator's stylists bring a clientele of their own or depend on walk-ins, and what happens to coverage if two or three key stylists leave. Lease length and tenant-improvement cost matter more than the equipment, and the study should compare them with a $138,300 median. An appraiser will have little hard collateral to value, so the study's case rests on the earning power of the practice. A loan whose county falls outside the July 2023 area list never reaches these Los Angeles totals.