SBA 7(a) Beauty Salon Feasibility Study in Pennsylvania

The smallest loans in the file

Pennsylvania salons borrowed from SBA 7(a) on a scale few classes match. Of 353 loans approved from FY2017 to FY2026, totalling $56.9 million, the median is $50,000, which is 0.57x of the 7(a) median for salons nationally, and the central half runs only from $25,000 to $200,000. These are chair, fixture and working-capital loans, not buildings. Beauty salons stand 6 of 39 among Pennsylvania classes, and the state ranks 6 for the program, with 11.9% of loans franchised.

Who holds them

The lender table is led by TD Bank, National Association with 51 loans and $2.6 million, then The Huntington National Bank with 49 and $4.8 million and Manufacturers and Traders Trust Company with 40 and $2.9 million. Customers Bank has 19 loans for $5.2 million, and Wilmington Savings Fund Society FSB has 14 for $3.5 million. SBA gives the current holder of each loan; this is a count of books held. Philadelphia County has 51 loans, Allegheny 48, Montgomery 45, Delaware 22, Berks 18, Lehigh 17 and Bucks 16.

Floors

Cancellations after approval reached at least 9.4% of FY2017 to FY2024 approvals, climbing to 11.9% when loans not yet disbursed are included. For the 141 loans disbursed in FY2017 to FY2021, 5.0% have been charged off so far and 2.8% within the first five years. A salon owner and a bank should treat all four as minimums.

Timing

Counts peaked at 51 loans in FY2024 and at $9.3 million in FY2020, a year when only 36 loans produced the dollars because of a few larger awards.

Testing a Pennsylvania salon plan

The study should test the number of chairs against the stylists actually available to staff them, the rent per chair or per square foot, and the client base within a short drive. Because a typical loan is only $50,000, a plan that asks for much more has to show what the extra money buys, such as a build-out in a leased space. Coverage must survive the loss of a lead stylist, and since fixtures are weak collateral the lender will look to the owner's credit, so the study should lay out the guarantee and the lease term plainly.