Beauty Salon Feasibility Study in North Dakota

Salons borrow far more than elsewhere

North Dakota is where salon loans look large. The median loan is $200,000, a ratio of 2.00x against the rest of the country, with the middle of the range at $87,500 to $411,850. A location quotient of 1.62x also shows salons take a bigger part of state approvals than they do nationally, and they rank 4 of 39 among North Dakota asset classes although the state is 38 of 54 by loan count. From FY2017 to FY2026 SBA approved 43 loans totalling $13.0 million. Salon owners in the state appear to buy buildings, outfit multi-chair studios or add suites, rather than lease a small storefront.

Programs, lenders and the two big counties

The product mix leans toward real estate more than usual: 32 loans under SBA 7(a) and 11 under SBA 504. Franchising reaches only 2.3% of loans. Dakota Business Lending holds 6 of the 504 loans, with $2.1 million, and First Western Bank & Trust holds 11 of the 7(a) loans, with $3.2 million. Cass County has 21 loans and Burleigh 11, so two counties account for most of the lending, while Stark has 3 and Barnes, Stutsman and Williams have 2 each. Smaller towns are barely visible.

Cancellation is rare; losses are unquoted

Cancellation sits at only 3.0%, a floor for approvals through FY2024, with the same figure when undisbursed loans are counted. That is very low and suggests that salon plans in North Dakota usually close once approved. A charge-off rate is not given, since the funded FY2017 to FY2021 pool is below 30 loans, and that is not a claim of zero. Because the cohort is so small, one closure would move any percentage a long way.

What a North Dakota salon study must show

Population is the central question. A study should show how many residents within a reasonable drive can support the number of chairs proposed, how many stylists are available locally, and whether booth rental or commission pay fits the area. Because loans here run larger, it must also justify the building or build-out cost with per-chair revenue. Winter weather can reduce appointments for days at a time, so the debt service test should use a conservative year. The appraisal should treat fixtures as low-value collateral. This page gives lenders and owners the state's approved-loan pattern.