For new restaurant owners, when and how to start financing restaurant equipment can be very tricky and this is quite understandable since they are still trying to establish themselves without dying a financial death.

It is always a good idea to explore your financing options so that you can determine when and how to finance your restaurant equipment. You can explore your options by first estimating your start-up costs. From there, you can calculate how much money you are willing to invest in your restaurant and figure out how much you need to borrow to make your restaurant run smoothly.

When To Consider Financing Restaurant Equipment

You can finance restaurant equipment once you have explored various financing options. Below are some of the options you can explore.

Traditional Bank Loans

For any aspiring restaurant owner, bank loans are the most common method of financing restaurant equipment. However, securing a loan for a first timer may have its challenges. For one, commercial banks find financing start-up restaurants a risky venture. This is because 25% of new restaurants fail within the first year of opening. It is also a risky venture for the restaurant owner as well because when the restaurant closes, they will still have to repay the loan. The probability of being rejected for a loan the first time is also very high.

Investors

Another way you can finance your restaurant equipment is to find interested investors. You have to know the right people in the industry and approach them with your proposal. You can increase your chances of convincing an investor to invest in your restaurant by offering them an incentive. For instance, you can offer them equity in your restaurant. This way, even if the restaurant performs poorly, the only thing they will lose is their investment.

Leasing

If the above options are not available to you, then you should consider leasing as the best financing option for you. There are many reasons you should consider leasing restaurant equipment. It is very ideal during hard economic times. This will help you to preserve cash for other expenses in your restaurant such as payroll. Leasing also helps you to predict your budget for monthly expenditures since the lease payments are fixed.

How To Lease Kitchen Equipment

It is not particularly that hard to lease kitchen equipment but there are some major considerations you should keep in mind.

You should have enough capital to make a deposit. Leasing doesn’t always require a down payment but most leasing contracts require that you put some money down. Often, this money is refundable a few months into the contract.

Choose a lease term that is suitable for your budget. Shorter lease terms are much more expensive than longer ones. Net leases are cheaper but the cost of repairing and maintaining the restaurant equipment can really add up. Serviced leases on the other hand are much more expensive but they take care of repair and maintenance costs.

If you want to own the equipment at the end of your lease, then you should consider a lease to own option. You will need to pay higher monthly fees but once the lease period ends, you have the option of buying the restaurant equipment at either $1, at fair market price or at 10% of the initial price of the equipment. This of course will depend on the type of agreement you have with your lessor.

Shop around for the best rates in the market. There are many leasing companies out there and they are all offering competitive rates. You can simplify your search by simply visiting LeaseQ. They are the leading source of reputable finance companies, all willing to offer you free quotes. What’s more is that you can get a free quote within two minutes. From there you can compare and prioritize.

Do not sign lease-to-own agreements if you will not be able to buy the equipment at the end of your lease. This will only be a total waste of money because why should you pay the extra money if you aren’t going to buy the equipment at the end of lease?

You should also be wary of lessors who tell you “trust me” or “we will do it” but don’t include their promises in the lease contract. Anything that you agree on should be in writing on the lease agreement so that when the leasing company goes back on its word, you have written proof that you can present in court if need be.

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