How Tanning Salon Owners Approach a Commercial Mortgage
Buying the premises your tanning salon already trades from is a considered step that turns rent into equity and locks in the location your clients know. At Ardent Capital Group we speak with salon and personal-services operators about this kind of commercial property purchase, and this guide walks through how a lender actually sees it.
Ardent Capital Group is a specialist in commercial mortgages for tanning salon operators across Australia. Our team can help you move from tenant to owner, and give you clear lending advice on structure and strategy.
- Access finance from $100,000 to $10,000,000+, tailored to owner-occupiers and investors.
- Over $500,000,000 in funding facilitated across a decade for more than 1,000 borrowers.
- Major bank and non-bank lender panel, term sheets available once we understand your numbers.
- We service Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra, Hobart and surrounding regional towns.
If buying your premises is on the horizon, we can map the numbers with you and structure a tanning salon property loan around your trading position.
Why tanning salon owners choose to buy
Spray tan studios invest heavily in fit-out and compliance. Extraction-equipped spray booths, ventilation and air treatment, airbrush systems and compressors, waterproof flooring and drainage, durable wall finishes, laundry and hot-water capacity, staff room and storage, retail shelving, POS and security, lighting and climate control. This build is specific to your process and brand standards, and expensive to repeat every lease cycle.
Location anchors your demand. High-street sites near gyms, hair and beauty clusters, and commuter paths drive walk-ins and repeat bookings. Visibility, signage rights and convenient parking support prebooked sessions, memberships and pre-paid packages.
Sector resilience for personal services comes from recurring appointments around events and seasons, local market loyalty and cross-sell of retail products. Repayments on a commercial mortgage build equity in an owned asset while stabilising long-term occupancy costs.
Key drivers:
- Control fit-out longevity, avoid paying make-good on improvements you funded.
- Protect location equity where your client base expects you to be.
- Convert rent to repayments that create ownership over time.
- Improve cost certainty, with the ability to set commercial rent between related entities.
Buying may not suit if you plan to relocate or scale to a larger site soon, hold a short remaining lease term that you want to test before committing to an area, or if capital is better deployed into a second studio, technology upgrades or marketing. The decision sits with you.
How lenders approach a tanning salon purchase
- Deposit and LVR. A tanning salon shopfront is standard commercial security, valued on comparable sales and achievable rent. It gears up to 75 to 80 per cent for owner-occupiers, which means a 20 to 25 per cent deposit. The major banks assess owner-occupier commercial case by case, which is one reason a broker helps.
- Loan term and structure. Non-bank lenders publish terms of 25 to 30 years; the banks' commercial products commonly run 10 to 15 years. Repayments can be principal and interest for faster debt reduction, or interest only for a period to prioritise cash flow during fit-out or growth.
- Security and serviceability. The property is the primary security. Lenders assess your business financials, serviceability from trading income, and your existing commitments. Multi-site groups can consolidate performance to support the application.
- Owner-occupier treatment. Lenders usually view an owner-occupier purchase favourably, given the alignment between the trading business and the premises.
Ownership structures a lender sees
Many tanning salon operators hold the freehold in a separate entity, such as a company or trust, and lease it back to the trading business at a commercial rent. A lender then reads the inter-entity rent as the serviceability line and takes the property as security, which keeps the trading cash flow and the asset clearly separated and makes occupancy costs easy to benchmark.
An SMSF is another arrangement a lender sees. Commercial premises generally qualify as business real property, so a fund can hold the building under a limited recourse borrowing arrangement and lease it to your trading company at market rate, held through a bare trust while the loan runs. The appeal is retirement-focused ownership with rental income to the fund, alongside trade-offs such as contribution caps and liquidity rules. Ardent arranges the lending around your entities, and the tax, super and ownership detail sits with your accountant and SMSF specialist to confirm before you proceed.
The lender's checklist
- Business financials: Two to three years of financial statements, BAS and tax returns, plus YTD management reports if recent trading is stronger.
- Serviceability: Historical and forecast cash flow, including seasonality around summer peaks and event periods, membership or pre-paid package revenue, and staffing profile.
- Property and valuation: Location quality, foot traffic, visibility, parking, strata condition, outgoings and a formal valuation.
- Deposit and equity position: Cash, retained earnings, or the ability to leverage your equity in other property.
- Lease and occupancy: If buying as an investor, lease terms, options and covenants. If owner-occupier, a draft lease between related entities on commercial terms.
A specialist broker who understands tanning salon operations, council ventilation and hygiene requirements, and the real fit-out cost structure can tighten submissions and improve lender fit.
One way this can play out
This is an illustrative scenario that shows the kind of situation we can assist with, and how the thinking might run.
- Situation: An inner-Melbourne spray tan studio trading six years, two rooms plus a retail front, with peak demand from September to March. The owner wants to buy a 120 sqm strata retail lot near a gym and hair cluster to lock in the location and add a third booth.
Options mapped:
- Buy in a family trust and lease to the trading company at market rent.
- Buy through an SMSF with a limited recourse borrowing arrangement, with fit-out funded separately.
- Remain a tenant and open a second studio instead.
Funding shape discussed:
- Up to 80 per cent LVR for owner-occupied strata retail, with potential interest only for 12 to 24 months during fit-out.
- Fit-out financed via asset finance and a working capital facility to preserve cash.
- Equity from the owner's home used to strengthen the deposit.
What each path could look like:
- Trust ownership, principal and interest over 20 years, with rent set to a commercial rate.
- SMSF ownership with a separate asset finance facility for booths and extraction, on arm's length rent.
- Stay leasing and redirect capital to marketing and a second site, revisiting a purchase next year.
How we would approach it: we would map the ranges, structures and repayments with you, then take the deal to the lenders that suit it. The figures above are illustrative, not confirmed outcomes, and every figure is subject to serviceability, lender appetite and approval.
Other lending we can help with
- Asset finance for spray tan equipment and extraction systems. Fund booths, airbrush kits, compressors, heated drying stations and compliant ventilation without heavy upfront spend, through tanning salon equipment finance.
- Fit-out and refurbishment finance. Cover waterproof flooring, plumbing, laundry, HVAC, lighting, partitions, signage and reception upgrades.
- Working capital loans. Smooth seasonality, buy tanning fluid and consumables in bulk, and cover staffing during peak periods with working capital for a tanning salon.
- Business overdraft. Flexible buffer linked to your trading account to manage deposits, gift voucher redemptions and inventory cycles.
- Refinancing and debt consolidation. Reset terms, reduce total repayments and align facilities to your cash flow profile.
- Construction and renovation. Fund reconfiguration to add extra booths, improve extraction or expand into adjacent space.
- Business or premises acquisition finance. Support buying a competitor's client book, or purchasing the freehold you currently occupy.
Ownership can interact with these facilities. For example, a refinance of the premises can consolidate short-term debt, or equity in the freehold can support expansion.
Talk to a tanning salon finance specialist
Ardent Capital Group specialises in commercial mortgages for tanning salon operators. We arrange and structure finance around how you plan to hold and occupy the property, and we focus on clarity, serviceability and long-term fit.
We service Sydney, Melbourne, Brisbane, Gold Coast, Perth, Adelaide, Canberra and surrounding metro and regional areas. We have helped facilitate over $500,000,000 in funding across a decade for more than 1,000 borrowers. If you want clear options and optimal financial outcomes, talk to our team.
Questions we're often asked
How much deposit do I need to buy a strata retail lot for a tanning salon? Standard commercial security like a tanning salon shopfront gears up to 75 to 80 per cent for owner-occupiers, so plan for a 20 to 25 per cent deposit. The major banks assess owner-occupier commercial case by case.
Can I fund my spray booth extraction and fit-out within the commercial mortgage? The building loan typically covers the property purchase. Fit-out is commonly financed via a dedicated fit-out facility or asset finance to preserve working capital.
Is an SMSF allowed to buy my salon premises and lease it to my business? Yes, commercial property generally qualifies as business real property, and an SMSF can lease it to your trading company at market rent under superannuation rules.
Will lenders recognise my seasonal peaks and pre-paid package revenue? Yes, lenders assess serviceability using historical financials, POS and booking data, and will factor seasonality, memberships and pre-paid packages where records are clear.
What property types do lenders favour for tanning salons? Well-located high-street or neighbourhood retail with strong foot traffic, visibility, parking and sound strata management is preferred. Clear council compliance for ventilation and personal services use is important.
I run two studios. Can I use both sets of financials to support one purchase? Yes, multi-site groups often present consolidated financials. Lenders will assess combined cash flow and commitments to test serviceability.
Written by
Nick Chong
Managing Director, M.AppFin, Dip. Mortgage Mgmt
Nick holds a Bachelor of Agricultural Economics, a Master of Applied Finance and an Advanced Diploma in Financial Planning. He founded Ardent Capital in 2016 after more than a decade in financial planning and mortgage broking. For the past ten years he has led a team of finance specialists, mortgage advisers, brokers and credit analysts, all working to secure optimal outcomes for clients and always acting in their best interests. The team brings both a qualitative and a quantitative approach to every deal.
