Loan For Beauty Parlours

Type of loans available for Beauty Parlours

A beauty parlour falls under Small & Medium Enterprise or a Micro Unit Enterprise. Both these categories have some attractive financial options. The loans are offered under two categories

• Term Loan :

This financing option can be used for owning the premises or to buy tools and equipment. Term loans can be in the form of short-term loans or Line of Credit.

• Working Capital Loan :

This financing option helps in meeting the expenses of running the business.

Shopping for the suitable loan product

As mentioned earlier, there are numerous financing options available in the market. A solid groundwork is necessary to narrow down the ones suitable for your needs. Determining whether one needs a long-term loan, or a short-term loan, a working capital loan or a simple line of credit is very important.

Documentation plays a vital role in business loan applications. Your business proposal is the lead document while presenting your application to the bank. It has to be easily comprehensible, stating all vital information required by the bank.

Include details pertaining to your experience in the business and mention any achievements or milestones to boost your case. Give details of any existing relationship with the bank. If you have any previous loans and have a good repayment history, it is worth mentioning. Elucidate your monetary contribution towards the business. It shows your commitment level towards the enterprise. Stack up all the necessary documentation, fill up the application and submit it to the bank.

Here are a few pointers to start you up with a business loan:

Quantum of Loan :

Beauty parlour is considered as a small & medium scale business. For this kind of businesses, loan amounts range from Rs. 25,000 up to Rs. 1 crore. But the applicant should carefully measure all parameters before deciding the loan amount he/she wants to apply for.

Guarantee/Collateral :

Rate of Interest :

Business loans are considered as general term loans and the rate of interest is based on the MCLR rate. The current interest rate for SME units ranges from 10% to 14%. However, women applicants are given concessions ranging from 0.25% - 0.50% on the interest rates.

Loan margin :

For loans up to Rs.25,000, the margin is usually NIL. For loans above Rs. 25,000 up to Rs. 2 lacs, a margin of 15% is observed and for loans above Rs.2 lac up to Rs. 10 lacs, a margin of 25% is observed.

Repayment Tenures :

Business loans usually come with a repayment tenure of 5-7 years. However, they are given a period of moratorium ranging from 1-3 years.

Credit history :

Revenue endorsements :

Give the history of the revenue generated in the business to assure the lender of the business viability. If it is a new set up, provide the details of the profitability of the venture to impress upon the banker.

Schemes offering loans for beauty parlours

As mentioned earlier, there are numerous loan products on offer to help entrepreneurs to start their beauty parlour or salon business. A few banks offer exclusive beauty parlour loans

• Bharathiya Mahila Bank – Shringaar

This loan is specially designed for women planning to establish their own Beauty Parlour. This loan was devised in partnership with leading Salon brands like Naturals, CavinKare & Lakme Ltd. This loan is provided either as a Term Loan or a Working Capital Loan. The loan can be used for purchase/construction of the parlour premises and purchase of tools and equipment. Under the CGTMSE loan facility of the Government of India, this loan does not require any collateral for loans up to Rs. 1 crore. The current rate of interest being offered is between 10.15% - 13.65%. A concession of 0.25% on the interest rate is offered to women applicants. The repayment tenure is 7 years for Shringaar loans.

• Orient Mahila Vikas Yojana Scheme

This scheme is initiated by Oriental Bank of Commerce. It helps women with the initial capital to set up a small business. The applicant should hold 51% ownership of the business for which the loan is applied for. A loan amount of Rs.10 lac can be availed without any security or collateral. The maximum repayment tenure is 7 years. A concession of 2% is offered on the interest rate.

• MUDRA Yojana Scheme for Women

The Pradhan Mantri Mudra Yojana (PMMY) has developed various schemes and products aimed at supporting the development and funding needs of micro unit/entrepreneur beneficiaries. It has 3 segments signifying the stage of growth/development and the funding needs of the units –

• Shishu: covering loans up to Rs. 50,000/-
• Kishor: covering loans of Rs. 50,000/- up to Rs. 5 lacs
• Tarun: covering loans of Rs. 5 lacs up to Rs. 10 lacs

Women entrepreneurs can avail loans for their business under these schemes. Under the MUDRA scheme, women business owners can get a concession on the interest rates.

The above schemes are specially designed for women applicants. Other applicants can avail a loan through various other Small & Medium Business financing options.