SBA 504 Beauty Salon Feasibility Study in Minnesota

Fourth in the country, with higher loans than salons elsewhere

Minnesota ranks 4 among states for SBA 504 beauty salon loans. Minnesota's median loan, $343,500, is 1.47x the class median nationwide under 504, and half of its loans run from $169,250 to $584,250. Over FY2017 to FY2026 there were 28 approvals worth $12.8 million. Salons hold 13 of 39 within Minnesota asset types. No franchise brands appear, at 0.00%.

Two development corporations

The table shows Midwest Business Finance Corporation with 9 loans and $3.0 million, and Amplio Economic Development Corporation with 7 loans and $1.9 million. Hennepin County leads with 8 loans, Ramsey and Stearns show 3 each, Anoka, Nicollet and Wright show 2 each, and single loans appear elsewhere. Annual counts reached 7 in FY2021 with $2.5 million, dropped to none in FY2023, and rebounded to 5 in FY2026 with $2.9 million.

What the blanks mean

Percentages for cancellation and for charge-off cannot be shown for Minnesota salons, the early groups being small. For a lender, the useful facts here are size and concentration, together with the swing from a year with no approvals to a year with 5. A borrower should ask which of the two development corporations serves the county, because each handles a different slice of the state.

What a Minnesota salon study must test

A salon that wants a 504 loan is buying or building real estate, so the study should explain the ownership case: a rent saved, a building that fits the business, and a second tenant if space is left over. It should count chairs, stylists and the revenue each produces, set booth rental against employee payroll, and show how retail product sales add to income. A higher median than elsewhere suggests that Minnesota projects include building purchases, and the study should bring a cost per square foot and a bid. Minnesota winters affect appointment patterns and heating costs, and seasonal swings belong in the monthly model. The stylists' client following is the true asset, so the study should discuss how many would stay if one left, and the lease for any rented chairs. Debt service must be covered at an average chair utilization below the target, and the appraisal should show what rent another salon could pay.