SBA 7(a) Beauty Salon Feasibility Study in Illinois

Beauty salons are the seventh-ranked asset class in Illinois, 7 of 39, and the state is ninth in the country for 7(a) salon loans. The program approved 300 loans worth $66.0 million between FY2017 and FY2026. By size the cell is typical: the $85,450 median is 0.98x the 7(a) salon median nationwide, with $40,000 to $227,625 as the middle half. The county spread is concentrated. Cook County alone has 149 of the 300 loans, DuPage 29, Lake 27, Kane 20 and Will 19, so these five counties supply the great majority of lending, while Sangamon has 14 and Champaign and Peoria 3 each.

Franchise share and lenders

Franchised salons make up 12.0% of loans, which leaves independents and booth-rental operators as the norm. The Huntington National Bank holds 58 loans worth $7.2 million, U.S. Bank, National Association 41 worth $4.2 million, Northeast Bank 15 worth $1.9 million, PNC Bank, National Association 11 worth $1.6 million, and Newtek Small Business Finance, LLC 10 worth $1.3 million. Each entry is SBA's record of loans held, not a comment on any firm's methods.

Years and outcome floors

FY2020 is a curiosity: 21 loans, yet $16.7 million, far above the usual annual total of $2.8 million to $8.4 million. FY2025 had 43 loans worth $5.6 million, the highest count, and FY2026 had 33. For salon approvals made FY2017 to FY2024, at least 10.3% fell through before funding, or 12.5% with undisbursed loans included. The FY2017 to FY2021 cohort funded 116 loans, of which 5.2% at the least are charged off and 3.4% were by year five. Open loans can raise those floors.

How a salon study should be built

Salons earn from chairs and stylists, so the study should test how many stations the space supports, whether stylists are employees or renters, and how retention of key stylists affects revenue, because a stylist's departure can take revenue with it. It should compare rent per square foot with expected revenue per chair in the specific suburb or neighborhood, count nearby competitors, and show the build-out and equipment budget against a note near the median. Debt service coverage should be run with a slow fill of chairs and with the loss of a top stylist. Because collateral on small notes is likely to be equipment and leasehold improvements, the study should be honest about recovery value. SBA states program limits; this page does not.