Beauty Salon Feasibility Study in Oregon

Small loans and a high loss floor

Oregon salons stand out in the SBA record on loan size and on loss: they borrow little, and their loans fail often. The median loan is $48,000, only 0.48x the national median for beauty salons, and 18.8% of the loans disbursed from FY2017 to FY2021 have already been charged off. Our screen flags both the median and that charge-off rate as standing apart, by its margin, from Oregon's lending across every class and from salons nationally. In volume the cell is middling: 103 approvals worth $15.9 million from FY2017 to FY2026, a state rank of 24 of 54, a rank of 9 of 39 among Oregon classes, and a location quotient of 0.77x.

The loan sizes describe working capital and equipment more than buildings. The middle half runs from $25,000 to $154,000, SBA 7(a) carries 100 of the loans and SBA 504 just 3. Columbia Bank holds 32 loans totalling $1.4 million and U.S. Bank, National Association 21 totalling $1.2 million, and those banks lead the file; Washington Trust Bank and Northeast Bank hold 5 each, for $818,500 and $330,700. A brand stands behind 11.7% of loans. Multnomah County leads with 22 loans, Washington County follows at 15, Clackamas at 13 and Lane at 11.

Reading the Oregon salon floors

The loss figure rests on a cohort of 32 funded loans, just above the size at which we publish a rate, so it should be read as a strong signal rather than a precise measure. Of those loans, 9.4% were charged off within five years of approval and 18.8% to date, which means a sizable share of the damage arrived after year five. For Oregon salon approvals of FY2017 to FY2024, cancellation after approval stands at 12.9%, and the ceiling matches it, so no undisbursed loans are left to move it. Lending has picked up, from 5 loans in FY2022 to 17 in FY2024 and 25 in FY2025, while FY2026 shows 8 loans for $567,600. Every one of these rates is a floor.

What an Oregon salon study needs to establish

A small loan does not make the feasibility question small. With losses this high, the study has to show that the salon can carry its lease and its payment through slow seasons and stylist turnover, not only in its first year. Demand should be tested chair by chair against nearby salons and suites, especially in Multnomah, Washington and Clackamas counties where the loans cluster. Cost work covers the build-out and equipment that a loan near $48,000 is meant to fund, and debt service coverage should be stress tested at reduced bookings. Where an owner seeks to buy a building, the appraisal has to stand on retail comparables, because the business income in this cell has proved fragile.