No matter your financial situation, financing your restaurant equipment is always possible. Restaurant equipment can get extremely expensive. Certain walk-in refrigerators can cost up to $11,000, all the equipment you may need can cost up to $150,000. Numbers like these are intimidating, but no need to stress. There’s always a way to finance your restaurant equipment. You may have more options than you thought.
Whether you’re a rapidly growing restaurant chain or a small mom and pop restaurant, all restaurants need new equipment. Updating your equipment will keep your service speedy and efficient.
We’ve compiled some information that’ll help when financing your new restaurant equipment. Here is everything you need to know about how to qualify for a restaurant equipment financial plan and the equipment leasing rates you’ll be paying.
How to Qualify
Restaurant equipment leasing is a great option for restaurants that want to separate their resources between equipment, resources, working capital for hiring the best employees and operations. Applying for a restaurant equipment loan isn’t much different than applying for any other equipment loan. In this case, you will need a few common financial characteristics similar to other financial loan applications. When applying, may need to provide:
• Credit Score over 625
• Proof of time in Business (Trust Capital will finance start up restaurants)
• Available Collateral: used only if you have a low credit score under a 600
• Available Funds (proof of liquidity)
If applying for a restaurant equipment loan with Trust Capital, you most likely won’t be asked for additional collateral. We understand that asking for collateral can be intimidating. We want to provide restaurant startups with opportunities, not scare them away. We generally approve restaurateurs with just a single page application up to $200,000.00 and have the best finance programs for start up restaurants.
Qualifying for a Restaurant Equipment Loan with a Local Bank
A first thought when financing your restaurant equipment would be to go to a local bank. This may not be the best choice for your restaurant equipment leasing plan.
Local banks have strict requirements and intense screening processes just to determine if your restaurant is eligible for a restaurant equipment loan. Get ready for an audit. Local banks will ask you to submit your licenses, financial statements, two years of tax returns and put a lien on your entire business. They make it very difficult to get additional financing in the future for your business. In your contract with a bank loan they will not allow you to get more financing elsewhere with out their permission. If you do they can call your loan and make you pay for the full amount of the loan on the spot.
These strict guidelines are the reason many people choose to file for a restaurant equipment loan with equipment leasing companies like Trust Capital. Less pressure and no blanket lien requirements create a better more relaxed restaurant equipment leasing experience. Use your bank for cash loans only and let equipment leasing companies do what they're good at which is leasing equipment.
Equipment Leasing Rates
Once you qualify, you’ll be given a fixed monthly payment you pay in order to eventually own the equipment at the end of the lease for a $1, a 10% PUT or it's then Fair market Value. Restaurant equipment financing rates ultimately depend on the risk involved in taking on your business. Rates start at 4.75% and go up from their depending on how the credit manager sees the risk of your restaurant equipment leasing application. You'll generally be presented with terms up to 60 months and can request terms up to 72 months depending on the credit risk and age of the equipment. If you have excellent credit you can negotiate a no prepayment penalty after 12 or 18 months but generally in the equipment leasing industry you pay what you sign up for. So decide early on if a lower total out of pocket cost or a lower monthly payment is more important to you. Then pick a term that best suits your needs.
Keep in mind if you structure this on an equipment finance agreement, $1 buyout lease or a 10% PUT lease you can utilize section 179 to accelerate the depreciation the first year of ownership to lower your true cost of ownership. Furthermore, if you would rather have tax benefits for the length of your equipment lease than structure your agreement with a fair market value buyout or term residual buy out to write off the sum of your equipment leasing payments entirely each year you keep your lease off your taxable income. Then at the end just get rid of the old equipment and give your restaurant a fresh new look. Your loyal customers will definitely appreciate this.
Startup restaurants involve a higher risk due to the uncertainty of reputation, food safety, cleanliness, and customer feedback. This can result in a higher interest rate and higher monthly payments on your restaurant equipment leasing contract. Contrary to this, franchises and older restaurants get lower rates because of their reliable track record, proven food quality and cleanliness, and lower risk of failure. All though Trust Capital has developed the best start up equipment leasing program in the equipment leasing industry for start up restaurants that will give your start up restaurant rates starting at 9%, with $0 down on terms up to 60 months.
The overall cost of restaurant equipment finance is lower for franchises as compared to startups. Reliability is established with time and reputation. Good reliability means lower equipment leasing rates.
If you need any additional help qualifying, you can always apply for a no obligation equipment finance program. Trust Capital developed a line of programs for restaurant business owners of any kind. With their help and guidance, you’ll be able to enroll in a restaurant equipment finance program without any difficulties that will fit your budget for continuous growth and prosperity.
Financing brand-new restaurant equipment isn’t as hard as it seems. What matters most here is your attitude, dedication, and your willingness to invest time and energy to enrich your restaurant.
Learn from your mistakes and be open to exploring your options and there’s no doubt you’ll have a restaurant equipment lease in no time.
If you’re curious to see how much your equipment financing payments would be, try out our restaurant equipment lease calculator today.
Final Thoughts on Restaurant Equipment Leasing: Rates and How to Qualify
In order for you get a quick idea of what your true equipment equipment leasing rates are on your restaurant equipment financing agreement, you need to determine your equipment lease rate with an equipment lease calculator. We make it transparent and straight forward for our customers. All you need to figure it out is your funding amount, payment amount, residual amount/buyout amount, lease term, and advance payments due up front.
As a sample calculation, if you are looking for restaurant equipment leasing worth $75,000 for a period of 60 months, with one payment up front, you should be able to afford that with a payment of $1,575 a month (if you are a start-up restaurant) or a payment of $1,485 a month (if you are an established business over two years).
With restaurant equipment leasing, you’ll get to finance 100% of the equipment’s cost with a flexible plan that suits your budget. Include taxes, shipping, warranty and installation. We've finance everything that's tangible and mission critical for a restaurant including hoods, kitchen equipment, fire suppression systems, point of sale systems, silverware, furniture, bar equipment, TV's, and signs.
You can even get working capital added onto the same equipment lease term. Add working capital up to 25% of the equipment cost to your lease agreement to put some low cost working capital in your pocket with fixed monthly terms.
At Trust Capital, a leading equipment finance company, we are dedicated to helping you get you the restaurant financing needed for all of your equipment in a prompt and efficient manner. For a quick calculation to see how much equipment you can afford, click here or call Trust Capital at 866-458-4777 for a no obligation approval.