SBA 7(a) Beauty Salon Feasibility Study in Iowa

Size and standing of the Iowa beauty salon record

The Iowa beauty salon cell holds 61 loans under SBA 7(a), $10.8 million in all, from FY2017 through FY2026. Iowa is 31 among states by beauty salon loan count, while Iowa holds beauty salon at 6 of 39 among its classes. Iowa borrowers took a median of $111,000, which is 1.28x of the figure that beauty salon borrowers elsewhere receive, in Iowa, above the SBA 7(a) norm for beauty salon. The central half of Iowa loans starts at $50,000 and, for beauty salon, tops out near $260,000; 14.8% of Iowa beauty salon loans carry a franchise flag.

Iowa holders and counties

By beauty salon loans approved in Iowa, U.S. Bank, National Association (8; $1.5 million); United Bank of Iowa (6; $966,900); Northwest Bank (6; $717,800) come first. SBA lists each Iowa beauty salon holder as current. Geographically, Polk (24), Linn (9), Black Hawk (3), Dallas (3) and Scott (3) lead Iowa beauty salon lending.

How the beauty salon pipeline moved

Iowa beauty salon approvals per year: FY2017 10 ($944,500), FY2018 5, FY2019 3, FY2020 2, FY2021 3 ($414,000); then for beauty salon in Iowa FY2022 11, FY2023 6, FY2024 13, FY2025 5, FY2026 3. The top Iowa dollar year, $1.7 million, was FY2024.

How Iowa loans ended up

Iowa beauty salon cancellations run at a floor of 7.5% for FY2017 to FY2024 approvals, or 7.5% if undisbursed beauty salon lending is counted in. Charge-offs of Iowa beauty salon loans are withheld: Iowa funded too few beauty salon loans in Iowa, so no rate is printed in Iowa for FY2017 to FY2021, and the beauty salon gap is not a zero.

Testing an Iowa salon plan

A beauty salon loan is small, so the study must be proportionate yet disciplined. It should count rival salons within a realistic trade area in Iowa, estimate how many chairs or suites the concept can keep full, and test whether stylists would work as employees or rent a chair. Fit-out or purchase spending belongs next to loans of about $111,000, and debt service should be shown after a slow first year while a client book forms. Where the owner buys the building, the appraiser will want market rent for comparable space.

Iowa salons: reading the missing loss rate

SBA records no special coding caveat for beauty salon loans, so the counts above are what they appear to be. The withheld charge-off rate removes history a lender might otherwise lean on, so the downside case in the study carries more of the load.