Barbershops have moved beyond just a shave and a haircut these days, taking the business of men’s grooming to a whole new level. Running a successful barbershop requires more than just a knack for styling–it also takes capital to keep the momentum going. When you need financing, a term loan may be the best solution. This quick guide explains:
- What a term loan is
- How barbershops can use them
- What’s required to obtain a term loan
How Term Loans Work
Term loans aren’t overly complicated. It works like this: the bank lends you a specific amount of money and you agree to repay it over a set period of time. The loan may have a fixed or variable interest rate but your principal payment is always the same.
Short-term loans typically have repayment periods lasting between three and 18 months. A long-term loan, on the other hand, could stretch the payments out over five to 10 years. Generally, the longer the repayment term, the more you’re able to borrow.
Some lenders offer intermediate term loans, which fall in the middle in terms of repayment. Bond Street’s intermediate term loans feature repayment terms of one to three years, with payments made on a biweekly or monthly basis. You can borrow up to $1 million, with rates starting as low as six percent.
Why choose a term loan?
A term loan from an online lender offers certain advantages over other types of financing. For instance, term loans tend to have more favorable interest rates than something like a merchant cash advance or a small business credit card. That’s important if you need financing for your barbershop but you don’t want to pay an unnecessarily high amount of interest.
The other advantage is speed. When you apply for a loan through a bank, it can take weeks for it to be processed and funded. A Small Business Administration (SBA) loan can take even longer. With a term loan, the process is much faster and more efficient. Bond Street, for example, can process term loan applications in as little as 48 hours.
Putting a Term Loan to Work for Your Barbershop
Term loans can prove valuable to barbershop owners in more ways than one. Here are some scenarios that illustrate the usefulness of a term loan:
- A competitor is closing up shop and wants to sell off all of their equipment and inventory at a steep discount but you don’t want to drain your cash reserves in order to snag a deal.
- Business is booming and you’re ready to open a second location, which means you’ll need cash to hire employees, purchase additional equipment and supplies, and cover the initial lease period on a new building.
- You’re ready to expand beyond just the service side of barbering and develop your own line of personal care and grooming products but you need money to get the first batch going.
- You’ve decided to give your shop a makeover, which requires cash to pay for things like new trimmers and clippers, upgraded chairs, new flooring and paint, and decorative touches.
The best way to look at a term loan is as an investment in your barbershop for the long haul. Sam Buffa, founder of New York City’s Fellow Barber, turned to Bond Street for a term loan after realizing that credit cards and loans from family weren’t enough to fuel the kind of growth he was after. To learn more about Sam’s story in his own words, check out the video below.
Getting Approved for a Term Loan
Before applying for a term loan for your barbershop, consider what lenders are looking for first. For example, Bond Street works with borrowers who have:
- 2+ years of operating history
- $150,000+ in annual revenue
- Preferably a 640 or higher personal credit score
When evaluating lenders, pay close attention to what’s needed to qualify. Besides that, carefully review the rates and fees to make sure your barbershop is getting the best lending terms.
At Bond Street, we believe financing a business should be simple, transparent, and fair. Reach out today or check your own rate in less than a minute.Get Started