How hard is it to get a restaurant equipment loan?

Getting an restaurant equipment financing can be easy or difficult depending on several factors. The difficulty level of getting an equipment loan mainly depends on the lender's criteria, the borrower's creditworthiness, and the type of equipment for which the loan is being applied.

Some lenders may have strict requirements that borrowers must meet before they can qualify for an equipment loan. For instance, some lenders may require borrowers to have a high credit score, a solid business history, and a sizable down payment. If you meet these requirements, you may find it easier to get an equipment loan.

On the other hand, if your credit score is low, your business is new, or you have no collateral to offer, it may be harder to get an equipment loan. In this case, you may need to explore other financing options such as leasing or renting equipment to meet your business needs.

Additionally, the type of equipment for which you are seeking a loan may also impact the ease of getting financing. If the equipment is new, in high demand, and has a good resale or trade-in value, you may find it easier to secure an equipment loan. However, if the equipment is older, has little resale value, or is not in high demand, lenders may be less willing to finance it.

Financing Options for Restaurant Equipment

Utilizing a Lease to Obtain Restaurant Equipment Could Result in Monetary Savings in Comparison to a Direct Purchase.

What Are the Advantages of Equipment Financing?

Owners of small and medium sized restaurants have to face the difficulty of managing their finances, including merchant cash advances and business lines of credit, while seeking to make improvements. The most successful restaurants of today are able to acquire the necessary equipment to stay competitive and not compromise their capital and credit score. Our funding sources, which are backed by lenders, specialists, and financial institutions, make it possible for restaurant proprietors to lease equipment without down payments or collateral, and with terms that are adjustable.

Upsides of Leasing Restaurant Equipment and Supply

Taking out a lease on restaurant equipment can be a great way to go for those who don't have the budget to purchase the equipment outright.

The restaurant sector has access to an alternative form of financing in the form of restaurant equipment leasing.

Restaurants, bars, food trucks, restaurateur chefs, and coffee shops that are starting up or looking to expand their business may have limited funds available for capital. In these cases, equipment financing can be a great way to free up working capital for other productive uses. Moreover, leasing equipment can help protect and preserve their capital. For those who are under-capitalized and looking to open a new location or upgrade a piece of equipment, like a grill, financing may be the best option.

Restaurant equipment can be attained at a lower cost than other methods.

Leasing Restaurant Equipment Can Be a Useful Way to Combat Inflation

Leasing payments offer a hedge against inflation, as the payments will be made in cheaper currency saving your restaurant money. The China-U.S. trade war has and will continue to drive up the price of kitchen equipment such as refrigerators, freezers, char broil grills, planetary mixers, stove ranges, knives, ice machines, commercial ovens, dishwashers and fryers, as well as raw materials and USA-made restaurant equipment like True refrigerators and freezers. Financing restaurant equipment may be a good way to guard against inflation, as inflation is a strong argument in favor of owning it.

It does not show up as an obligation on the lessee's financial statement.

Does not interfere with any lines, similar to the way a credit card does not.

Allows for the mitigation of potential risks involved in restaurant operations.

Financing Commercial Kitchen Equipment is Prolonged by Warranties that are Used to Fund New Gear.

Unlike a merchant cash advance, business line of credit, bank loan, working capital loan, term loan and restaurant equipment loans, which are usually only available for a shorter time than the life of the commercial equipment, leases may be acquired for almost the entire length of the equipment warranty.

Atosa Refrigerators, Atosa Freezers, Atosa Sandwich Prep Tables and Pizza Prep Table come with a long-term five-year compressor warranty, and True Refrigeration and True Freezers have a 3-year parts and labor warranty with a 5-year compressor warranty. This results in a decreased cash outflow during the initial period of the restaurant equipment, with the cost being spread out over a longer lease agreement. This is beneficial in two ways: costs typically align better with revenues over the entire life of the asset, and a discounted cash flow analysis often shows a higher return on investment when payments are distributed throughout the asset life.

Financing in the Exact Amount is Available Through Leasing and Equipment Finance.

For equipment finance, the cost of the lease is generally the same throughout the duration of the agreement, unlike some other kinds of debt financing which may fluctuate based on the prime interest rate.

Financing Restaurant Equipment Offers an Adaptable Cash Flow Plan

The preceding benefit brings about an important consequence: many medium-term business loans provide for a balloon payment at the end of the loan. This acts as the basis for a new loan should the restaurant maintain its credit rating. However, if the owners' financial situation shifts, or bad credit, bankruptcy, or changes in interest rates occur, then securing refinancing can prove difficult. This necessitates a more conservative approach to liquidity and makes budgeting cash difficult, which can have a damaging effect on the restaurant's financial future. Without refinancing, equipment must be bought outright or used without any warranties.

Obtaining a Lease Gives Access to Complete Funding

The timing of lease loan payments have a great influence on a cash flow budget. Usually a payment is due at the end of the leasing period, with the first one due soon after the acquisition of the lease. This results in payments at the start of each period and the first one is due at the end of the same month of the purchase.

Restaurant equipment acquisition and related costs can be financed through lease options.

Financing of 100 percent is achievable through leasing restaurant equipment.

Sales taxes, delivery, and installation costs can be incorporated into the equipment financing arrangement and amortized over the lifespan of the lease. These up-front expenses can be quite high, leading to a large initial outlay of cash if the assets are bought.

Leasing as a Means of Accessing Rapid, Adaptable Financing

It can be more convenient than other financing options to customize the lease to the requisites of the lessee.

Circumvents the usually imposed limitations in bank loan contracts.

Leasing is typically quicker and more accommodating than borrowing money. Your restaurant lease agreement and cost-effective payments may be set up to suit the seasonal cash flow of the restaurant, and can be tailored to satisfy the individual needs of the applicant, restaurateur, and lessee. A financial lease is a contract in which the lessee agrees to make a series of payments to the lessor that amount to more than the cost of the equipment acquired. Usually, the payments are spread out over the majority of the equipment's useful life. During this initial length of the lease, the contract is not able to be cancelled by either the restaurant or leasing company. The lessee is obligated to continue leasing the restaurant gear until the end of the lease.

Section 179 Write-Off

The Section 179 deduction allows businesses to deduct the full purchase price of certain items from their taxable income. This write-off incentive is used to encourage businesses to purchase assets they need to operate and grow.

Small and medium-sized businesses and borrowers can take advantage of Section 179 to finance restaurant equipment, new or used, up to $1,000,000 in the 2020 tax year. For example, if a piece of equipment initially costs $10,000, they can deduct the entire amount from their net income, amounting to a tax deduction of $3,500 in the first year. This means that the true cost of the equipment is only $6,500, saving a significant amount of money that can be reinvested into the restaurant.

The Credit Application can be completed in less than 5 minutes and is usually approved within 24-48 hours.

Have you created a business plan?

Are you aware of your credit standing? Have you examined your credit history for any mistakes? Do you understand your individual credit score and your business credit ranking? Does your dining establishment have a strategic plan?

This article should not be taken as a financial/investment suggestion, but instead as an informative guide on the advantages and disadvantages of working with Quickspark National Funding's restaurant equipment financing.

In conclusion, the difficulty level of getting an equipment loan depends on several factors, including lender requirements, creditworthiness, and the type of equipment being financed. It is advisable to shop around for different lenders and financing options to increase your chances of securing an equipment loan.