Costs To Open a Tanning Salon & How To Get Funded

How much a tanning salon costs to start and how to obtain the proper funding.

Commercial Tanning SalonWhen planning a tanning salon business, one of the most important parts is defining the expenses and obtaining the appropriate amount of funding for the project. Careful planning and having the necessary capital can help assure an on-time completion and position the salon business for long term success. This article will help answer the questions:

  • How much does it cost to start a tanning salon?
  • How do I get financing?

How much money does it cost to open a tanning salon?

There are several factors that determine how much is costs to start a tanning salon and people are often surprised when they learn what the average investment requirements are. Size of the space, equipment selection, signage choice and furnishings are just a few fundamentals that affect cost.

Good looks, diversity of choice, and a cutting edge tanning technology are essential for a tanning salon to remain competitive and drive revenue year after year. A salon that will operate in this way will usually cost between $250,000 and $350,000 to construct provided the building is leased and will contain anywhere from 7 – 10 high-end tanning beds or related ‘devices’ (e.g. a sunless tanning booth, body wraps, Hydration Station, etc.)

Tanning salons in very small towns will likely cost less to build because it may not make sense to have quite this many beds. Conversely, tanning salons in large cities will likely cost more because of the nearby competitive influence and the need for more tanning beds to meet the demand.

Breakdown of Average Start-Up Costs

We have compiled averages in each category that make it easier to estimate project expenses. These averages are based on our direct involvement in dozens of upscale tanning salon project across the United States.

  • Construction expenses: $75 per square foot
    • Includes electrical, HVAC, framing, drywall, flooring, paint, etc.
    • Excludes any reimbursements from your landlord in the form of tenant improvement allowances.
  • Commercial tanning beds: $15,000 per piece.
    • This is an average, some beds are much less and some are much more.
    • Usually includes freight and install.
  • Timer system: $200 per room.
    • Includes timer manager that uplinks to a computer.
  • Signage and Furnishings: $10,000.
  • Initial inventory of tanning products: $4,000.
  • Computer and Software: $1,500.
  • Working Capital (deposits, advertising, printing, etc): $20,000.

How do I get financing to build a tanning salon?

Financing for a new tanning salon is usually obtained from one of the following sources:

  • Traditional Bank Financing
  • SBA Loans
  • Leasing (tanning beds and modular walls only)

Each will have requirements that need to be met in order to get an approval. Consider the following points:

  • Having cash to invest is required by banks in order to start a small business. Plan to invest 20% to 30% cash.
  • A good credit score is required. A credit score over 700 is excellent. A score below 700 may need a co-signer or guarantor.
  • A business plan that meets the requirements of the bank and/or the SBA is required. All banks want to know in detail how the money is spent (uses of funds) and how they will be paid back (sources of income).
  • Patience is a must because even with good business plan, a high credit score, and cash, not every bank lends money for start-up tanning salons.
  • Present a tanning salon business plan to several banks at the same time in order to find a willing lender.

Leasing tanning beds for a startup salon may not be the best idea (read what you need to know about leasing tanning beds article to find out why).

Through experience, we find that smaller local and regional banks are better suited for start-up funding. They try to invest in the community and work hard to provide service that larger banks lack or overlook. They take a more personalized approach and it seems they feel every customer’s needs are important.

Larger banks like US Bank, Key Bank, Chase, Citibank, Bank of America, Wells Fargo and others usually do not fund start-up businesses or have strict requirements that are harder to meet. Once 2-3 years of successful business ownership is shown, large banks become a more viable option.

There are exceptions. Large banks like the ones mentioned above at times have an interest in start-up funding then that interest disappears for a year or so then they start a big push for start-up businesses again. We suggest approaching these last since they can waste a great deal of time only to offer a “No thanks” in the end.

Many banks are Preferred Lending Partners of the Small Business Administration (SBA) that can approve and fund business projects with certain guarantees from the government. By carrying some of the risk, the SBA facilitates small business loans that banks themselves would not want.

Go to the SBA services page learn more. The basic 7a loan program is used most often. Read about the qualifications to know what banks are looking for.

To know which banks Preferred Lender Partners, go back to “Financial Assistance”, click on “7a Loan Program”, and then click “Preferred Lender Program (PLP)” at the right. Scroll to the bottom of the document and click “here” for a list of banks. This list covers the entire United States.

InSun, Inc. offers extensive assistance with the financing process. We are experts in creating a business plan for the SBA program and we can help guide you into good economic decisions regarding your new salon business. To get started, call 888.467.8611 or read our tanning salon business - frequently asked questions.