Is it Possible to Lease Restaurant Equipment with Bad Credit?

Can businesses lease restaurant equipment with bad credit? With the rates be decent?

lease restaurant equipment with bad creditHandling finances is one of the most difficult things you will do as a business owner, juggling all of your expenses along with trying to make enough money to pay off those expenses and still have some left over to act as your profit. Therefore, when the concept of credit comes into play, it’s easy to overextend your limits and spend your money poorly, putting your business in a bad position.

When you make mistakes and mishandle credit related situations, your credit score can go down, giving you problems in the future, especially if you’re planning on running a new business. Many have made those credit-related mistakes in the past and have learned from those mistakes, but those mistakes haven’t forgot about them.

Bad credit can make it more difficult to make a business trust you enough to loan you something or make a deal with you, which is a necessity for all businesses. If you’re running a restaurant, this will especially come into play, because you cannot afford the rent, utilities, employees, equipment, stock, and more.

Many businesses will try to get a loan, only to get rejected or get saddled with a high interest rate or ridiculous terms, all because of a bad credit score. That’s why business owners examine the alternative and see if they can lease restaurant equipment with bad credit and still get a good deal; little do they know, leasing is a good option for any business compared to purchasing.

 How Bad Credit Affects a Purchase on Equipment

The issue with bad credit always comes up if you’re forced to get a bank loan, which is normally the case if you are running a restaurant and need equipment.

Restaurant equipment is very pricey, and getting the funds for it isn’t easy. However, bank loans require a credit check, and they’ll check your credit to see if your business is trustworthy with a loan.

If your business has a lower credit score because of past mistakes, however, that shows up too, and banks become more unlikely to extend a loan to you. Even if they do, they’re almost guaranteed to spike the interest rate to the point where the loan isn’t worth it, and some require hard credit checks anyways, which just keeps hurting your credit.

It’s best to get a soft credit check, especially with a lower credit score, because that won’t damage your credit any further.

 Purchase Restaurant Equipment with Bad Credit

The fact of the matter is, whether or not you get a loan, purchasing equipment is a disadvantage with heavier duty equipment like kitchen hardware. Basically, all equipment will either break down to the point where it is more cost-effective to replace it or become outdated to the point where you need to replace it to keep up with the competition.

These both happen more frequently then you’d think for businesses, and when these instances occur, you need to pay for the equipment again to get new hardware. If you’re a newer business, repurchasing equipment can be extremely inconvenient, especially with businesses like restaurants that have such a strict budget.

In addition, if you have a bank loan, you may have not paid off the loan by the time you need to buy the equipment again, meaning you’re digging your business deeper into debt as far as loans go.

Lease Restaurant Equipment with Bad Credit

There are two primary advantages when you lease restaurant equipment with bad credit, but there are quite a few upsides to leasing in general. Leases require soft credit checks, so they don’t affect your credit score, and you get a decent lease deal even if you have bad credit, and there is no interest rate to leasing.

Leasing equipment is designed specifically for businesses starting up and trying to get equipment without breaking the bank, because they have the freedom to have the equipment without the responsibility of dealing with the full prices of repair of equipment.

With leasing, you get the equipment in exchange for a low, flat monthly rate, and at the end of the lease you get to choose whether to keep the lease and upgrade the hardware, return the equipment, or buy it from the vendor at a negotiable price.

Leasing is designed for new businesses but is maneuverable enough for any company to handle, even those who have had struggles in their past with credit. To learn more about how you can lease restaurant equipment with bad credit, click here.