SBA 7(a) Beauty Salon Feasibility Study in Texas

The charge-off floor sets this cell apart

Beauty salons financed by SBA 7(a) in Texas are a book of 733 loans and $190.0 million from FY2017 to FY2026, and two metrics separate them from salons across both programs and from 7(a) salons nationally. The first is size: the median loan of $175,600 stands at 2.02x what salons borrow under 7(a) elsewhere, with the middle half between $60,000 and $316,500. The second is loss. Of the 365 loans funded across FY2017 to FY2021, at least 12.6% have been charged off so far, and 4.9% within five years of approval, both floors.

Texas standing and franchise mix

Texas ranks 1 among states for this program in this class, while salons sit 9 of 39 among Texas asset classes. A franchise share of 33.6% means a third of loans fund a branded concept. Cancellations were 9.2% of FY2017 to FY2024 approvals at minimum, or 9.5% with loans still undisbursed counted.

Banks that hold the loans

Wells Fargo Bank National Association holds 61 loans worth $10.6 million and The Huntington National Bank 58 worth $13.8 million. PNC Bank, National Association has 41 worth $9.4 million, Simmons Bank 40 worth $10.8 million and Newtek Bank, National Association 34 worth $10.9 million. As SBA reports them, these are present holders, so a list like this speaks to where loans sit and not to a lender's willingness. Harris County has 129 loans, Collin 70, Dallas 68, Tarrant 66 and Travis 60.

Timing

Approvals went from 123 loans in FY2017 to a low of 26 in FY2022, then recovered to 119 loans and $29.7 million in FY2025, before slipping to 68 loans in FY2026.

What the study should test

A salon business turns on the stylist, so the study should show how many chairs or suites will be occupied, whether stylists rent or are employed, and what happens to revenue when a senior stylist leaves. It should test the build-out against a typical loan well above what salons borrow elsewhere, since a higher ticket is the first place a charge-off floor of this size should make a lender look. Coverage has to be shown with a slow ramp, and the appraisal can treat fixtures as thin collateral, so personal guarantees and lease length deserve plain discussion in the plan.