SBA 7(a) Beauty Salon Feasibility Study in Michigan

Lower loan sizes than salons elsewhere

The measure that distinguishes Michigan beauty salons in SBA 7(a) lending is size. The median loan is $58,750, only 0.68x the national salon figure, and half of the loans sit between $25,000 and $180,000. The files for FY2017 to FY2026 record 282 loans, $43.6 million gross. Michigan ranks 10 in the nation on this pairing, and salons are 7 of 39 in Michigan's own ranking. Franchise brands account for 8.2% of loans, so these are mostly independent operators. These are fit-out and working-capital loans, in which the borrower is often an individual stylist or owner leasing space.

The lender table and the map

The Huntington National Bank holds 151 of the 282 loans, with $13.3 million. Northeast Bank holds 10 for $1.4 million, Fifth Third Bank ($1.8 million) and Newtek Bank, National Association ($670,000) 7 each, and Citizens Bank, National Association 5 for $934,000. SBA's holder field is the source; it is not a description of a bank's own approach to salons. Oakland County has 71 loans, Wayne 45, Kent 26 and Macomb 21, with Genesee at 12, Kalamazoo at 9, Washtenaw at 7, and Berrien, Otsego and Saginaw at 6 each. Otsego, in the northern lower peninsula, shows that small-town salons are financed too. Approvals ranged from 16 in FY2019 to 44 in FY2025.

Cancellation and charge-off minimums

Cancellations are at least 9.3% of approvals from FY2017 to FY2024, or 11.6% counting loans still undisbursed as cancelled. In the cohort of 103 loans funded from FY2017 to FY2021, the charged-off share to date is 5.8%, and at five years it is the same. Those are floors; loans still open might fail later. Neither is distinctive for Michigan.

Testing a Michigan salon plan

Begin with who will sit in the chairs. Estimate the households and workers near the site, the number of competing salons and barbershops, and the price range customers pay. Stylists are both labor and revenue, so show how many chairs will be staffed, how they are paid, whether booth rental is used, and how clients follow a stylist if one leaves. Costs set beside a median of $58,750 should list the build-out, plumbing, chairs, stations and initial products, plus the lease term that lets the owner recover them. Michigan seasons modestly affect salons, with events and holidays creating peaks, and the study should say so. Show coverage with a slow first year. An appraiser will treat the business as the main value, with little real estate to support it.