Purchasing equipment, hiring new employees, finding the perfect location, upgrading your knowledge…
Well, it all comes down to one thing: money, money, money… 🎶
You could be starting out now, trying to expand your business, or simply upgrading your med spa — and the only way to do this is to break the bank. In reality, it’s rare for owners to cover these costs from their pockets. How it usually goes is that most of them go for loans.
Making the decision whether to take out a loan or not isn’t necessarily the easiest thing, so we’ll go into the details of the benefits and drawbacks of getting a loan for your med spa business.
Why med spa owners consider business loans
Running a successful med spa takes more than just great treatments — one of the key requirements is smart financial planning. That’s why many med spa owners turn to business loans to boost their growth.
Some common reasons owners seek funding:
- Startup costs – From leasing a space to hiring staff and buying initial supplies, launching a medspa can be expensive. A loan can help cover those early costs.
- Expanding services – Adding new treatments or hiring specialists often requires an upfront investment, but it can open the door to more revenue.
- Purchasing advanced equipment – High-tech machines can take your services to the next level — but they come with a price tag. Financing helps spread that cost out over time.
- Managing cash flow – Even thriving clinics can face seasonal dips or slow-paying clients. A loan can help smooth things out and keep operations running smoothly.
- Marketing and client growth – Investing in marketing is essential for attracting new clients and building your brand. A loan can fund campaigns that bring in long-term returns.
We know this might feel overwhelming, especially if you hate being on the admin side of operating a whole business. Consider hiring an MSO (Management Service Organization) to help ease the load.
Types of business loans for med spas
SBA loans
SBA – Small Business loans, are designed to help small businesses, including med spas, obtain funding they might not qualify for with regular bank loans.
These loans are supported by the U.S. Small Business Administration (SBA), meaning the SBA guarantees part of the loan, making this a smaller risk on the lender.
Typically, these loans include lower interest rates, longer repayment terms, and smaller down payments, so they’re among the best options for small businesses – buying equipment, renovating your space, new hires, or any other expenses you might be experiencing.
However, SBA loans can have a lengthy and detailed application process, and failing to meet repayment terms could still put personal or business assets at risk if a personal guarantee is required.
Working capital loans
Another common loan type among med spa owners is working capital loans. In contrast to the SBA loan, a working capital loan covers everyday expenses, not new equipment, property, or making major purchases.
Most commonly, owners take out this type of loan when money is tight — to pay staff during a quiet month, purchase products to cover rent, or for short-term marketing purposes. Another big difference is that working capital loans are short-term loans, meaning they usually need to be repaid within a year or two.
Business lines of credit
A business line of credit gives you access to a certain amount of money you can draw from when needed, instead of taking out a predetermined amount at once. The biggest difference is that you’ll pay interest only on the amount you’ve spent, not the entire amount that’s been approved.
For example, if your business line of credit is $50,000, but you only withdraw $5,000 to cover paying your staff members, you’ll be charged an interest fee only on the $5,000 – the same basis as a credit card.
Due to its simpler application process, this loan is most commonly used for supplies, small repairs, or unexpected costs that need to be addressed quickly.
Equipment financing
Equipment financing is the most commonly used loan for this specific purpose. It can be used to add new treatments to the menu, upgrade older machines, or simply purchase new equipment without draining your funds.
The entire process is quite simple – you choose the equipment you want to purchase, the lender gives you the funds to cover the cost, and you pay it back in monthly installments over a few years. The equipment serves as collateral (instead of real estate), so you don’t have to put up other assets.
This way, you can offer the best services and pay for the equipment steadily without draining your accounts at once because of the business financing.
Merchant cash advances
If you need cash fast to keep your med spa running or to cover unexpected costs, a merchant cash advance (MCA) might seem like a quick and easy solution. With this option, you get a certain sum of money upfront in exchange for a percentage of your future credit card sales.
The good thing is, you can get approved quickly, and you don’t need a perfect credit history for eligibility. But the catch is the cost. MCAs often come with very high repayment rates, and the money is taken out of your daily sales.
This can make managing your cash flow tough, especially during slower months. It’s a fast option, but not always the most affordable.
Personal loans or credit cards
Some small business owners use personal microloans or business credit cards as financing options to get their business off the ground or cover short-term business funding. These can be easier to qualify for in your loan application, especially if you’re just starting and don’t have a long business history.
However, there are a couple of things to watch out for. Interest rates can be high, especially with credit cards. Also, if you’re using a personal loan, you’re putting your own credit and finances on the line.
If something goes wrong with the business, you’re personally responsible for paying it back. These options can work in a pinch, but it’s important to be realistic about the loan amount you can borrow and repay.
Pros of med spa business loans
Running a med spa with great service will help you gain recognition, but the money keeps you afloat. A business loan can help you move forward without waiting until you’ve saved up every penny.
Let’s take a look at some of the benefits of using a business loan to support your med spa.
Access to capital
One of the biggest advantages of a business loan is quick access to funding. Instead of waiting months or even years to save up, a loan can help you pay for important things right away, like equipment, rent, or hiring staff. This can be especially helpful if you’re launching a new service or need to cover costs during a slow season.
Business growth and competitive edge
Staying ahead of the curve isn’t necessarily the easiest task in a fast-growing industry. With the right financing, you can upgrade your technology, expand your treatment menu, or renovate your space to create a better client experience. These improvements can help your med spa stand out and keep clients returning.
Flexible loan options
There’s no universal option when it comes to business loans. The good news is, you’ve got options to choose from. Whether it’s an SBA loan with low rates, equipment financing for a new laser machine, or a line of credit you can dip into as needed, there’s likely a loan that fits your unique goals and budget.
Build business credit
Taking out a business loan and paying it back on time doesn’t just help your med spa today — it also sets you up for the future. Responsible borrowing builds your business credit score, which can make it easier (and cheaper) to get financing down the road if you want to grow even more.
Tax benefits
Here’s a bonus that many business owners don’t always think about: loan interest might be tax-deductible. That means when tax season rolls around, you may be able to write off some of your loan costs — helping to ease the financial pressure of borrowing.
Cons of med spa business loans
While business loans can open up a lot of opportunities for med spa owners, they also come with some challenges. It’s important to look at both sides before committing to any kind of financing.
Here are a few downsides to keep in mind so you can make the best decision for your business.
Debt obligation
When you take out a loan, you commit to regular monthly payments, no matter how your business is doing. For new med spas or during slower seasons, this can put a real strain on your cash flow. If you’re not bringing in enough income, those payments can feel overwhelming.
Interest costs
Some loans come with high interest rates, especially if your credit score isn’t great or you use an unsecured loan. Over time, you could repay a lot more than you originally borrowed. It’s something to watch out for when comparing loan options.
Risk of default
If you fall behind on loan payments, it can lead to bigger problems — bad credit = tough financial situation. Missing payments can hurt your credit score — both personal and business — and might make it harder to get financing in the future. In serious cases, it can even put your business at financial risk.
Collateral requirements
Some lenders want extra security in case you can’t repay the loan. That could mean putting up equipment, inventory, or even personal assets as collateral. If things don’t go as planned and you default, you could lose those assets.
Approval challenges
Getting approved for a business loan isn’t always easy, especially if your med spa is new or doesn’t have much financial history. Lenders often want to see detailed paperwork like tax returns, business plans, and traditional bank statements. Without strong documentation, you may have to explore alternative funding options or work on building your credit first.
Operate your med spa business and boost revenue with Pabau
Taking out a business loan can be a smart way to grow your med spa, but it’s important to weigh the pros and cons before deciding.
The right funding can help you invest in better equipment, expand your services, and stay competitive, but it also comes with responsibilities like repayment, interest, and potential risk.
No matter how you choose to finance your growth, running a successful med spa depends on how well you manage day-to-day operations.
That’s where Pabau comes in. From scheduling and billing to client management and marketing, Pabau helps you operate smarter, save time, and boost revenue — all in one platform.
Ready to take your med spa to the next level? Book a free demo with Pabau and see how it can support your business.
