Use this checklist to assess businesses in this industry for SBA 7(a) lending and underwriting.

Owner Role + Service Dependency

• Does the owner provide the majority of client services?
• Is there a transition plan if clients follow the owner?
• Are there salaried stylists, or is it booth rental only?
• Has labor been normalized with market wage replacements?

Booth Rental + Cash Revenue Review

• Are booth rentals paid in cash or tracked digitally?
• Has rental income been verified through deposits or tax records?
• Are stylists under contract or month-to-month?
• What % of revenue is from owner services vs. third-party chairs?

CapEx and Salon Equipment Review

• Are chairs, mirrors, dryers, or wash stations in good condition?
• Has CapEx been normalized into free cash flow?
• Are any fixtures leased or seller-retained?
• Is deferred maintenance evident in the valuation?

Red Flags

• Owner is primary service provider with no backup team
• Cash-based booth rentals not tracked or underreported
• No CapEx for equipment in over 5 years
• Addbacks include spa treatments, fashion, and travel perks

SBA SOP Tip

Salons must reflect transferable income and infrastructure—not just personal goodwill. Normalize for CapEx, cash income, and owner replacement labor in all valuations.