SBA Coronavirus LoansThe SBA is offering national funding to restaurants and business. This might be the perfect solution for any restaurant needing Economic Injury assistance from the SBA.
COVID-19The SBA Economic Assistance Loans is offering national funding and no collateral with a 3.75% interest rate for small businesses and 2.75% for nonprofits and can take up to 30 years for repayment. You can use Small Business Coronavirus Small Business loan to cover accounts payable, debts, payroll and other bills like new equipment the coronavirus has affected your ability to pay.
The Paycheck Protection Program Loans is administered by an approved SBA lender, such as a local bank. I have been in touch with local bankers and they are still waiting on their guidance and guidelines; it's an evolving process still. When there's better information available I'll be happy to share that with you. If you have a local financial institution you're able to work with, that's probably the best place to start.
Crowd SourceIt's not the perfect solution for equipment finance, but crowd sourcing for local and national funding can be a good option keep your restaurant in business until figure your restaurants next move. Definitely, not a bad way to get your loyal customer base to lend a hand. Definitely Spread the word about your fundraiser to your followers on facebook and Go Fund Me. Remember your restaurant, cafe, coffee shop is an important part of your community and your community needs you and wants to help you.
Financing Restaurant EquipmentMost restaurateurs work-in the food service industry and graduate to open their own places. They learn on the job and rarely undertake any formal study, confining themselves to researching competition, scouring Yelp, Twitter, Instagram and Facebook for restaurant reviews and the internet for restaurant concepts, and ideas. Below is a list of financing options.
Restaurant Equipment LeasingIs this you or are a newbie entrepreneur or restaurateur, that is considering risking your retirement savings or good credit? Remember that risks also means the risk of failure? Then again Jeff Bezos said "I knew that if I failed. I wouldn't regret that, but I knew the one thing I might regret is not trying." Have you planned for the worse? Did you write a business plan? If you answered "No" then my second questions is the following: Do You Want to Be In Business Next Year? Writing a thoughtful business plan that operates your restaurant and equipment purchases on paper will help you make important business decisions about your restaurant. Do you have bad credit? One customer financial situation meant he could only afford a 75 pound propane deep fryer, but he had a sound business plan that he put into action at a local markets and sold tasty deep fried corn dogs and curly fries with a homemade curry mustard and ketchup. He later used the profits from this venture to open his own storefront. Another customer opened up a small hole in the wall sandwich shop whose first days sales was $36. She persisted and grew the business to successful restaurant catering company that employs over 100 people.
Equipment FinanceUnlike oil and water, top chefs, entrepreneurs and pros in the restaurant business will use a combination of local and national funding sources: debt, equity, working capital loan, self funding, sweat equity and external funding from friends and family do mix well. Below are a list of funding sources for equipment finance.
Silent PartnersSilent Partners with great credit score can be ideal because they invest cash and have no say in how the restaurant is run and your not paying a high interest rate. Unfortunately, they tend to be not so silent when you become successful.
InvestorsUsing some of your own money to finance your restaurant will definitely make you like a serious business owner to any lender or financier. Just don't risk your retirement savings on your new business. All investors are going to want to see a business plan, estimated start-up costs, a balance sheet, lease contracts, how much money you need from them, how soon before they'll see a return on their investment, how much they can expect to profit, and your vision of a working relationship with them.
VendorsMany suppliers offer Net-30 or Net-15 credit. This means that they will front you the goods and you need to pay them full in 15 or 30 days. Many vendors will require that you have a credit card on file with them so that they can charge your card on the 15th or 30th day. Remember your vendors want to see you success because you are their source of revenue.
Credit CardsProbably the best use of your business credit card is to use it cover your food costs. Having a cash back rewards card that pays you back 1 to 5 percent that you pay off before being charged a high interest rate is a great way to build your business and personal credit rating. This may not seem like much, but if you are able to grow your restaurant to gross $1,000,000 and your food costs is $400,000 the savings alone is $12,000 which will got or your bottom line. Properly forecast how much and what your going to grill, sell, purchase and receive according to your forecast, portion effectively, and control money, waste and theft and you can save another $12,000 plus dollars. Unfortunately, to many restaurant owners max out their credit cards and bought new restaurant and did not manage their food costs properly. Now they are know paying high interest, bouncing checks, destroying their credit rating and falling behind on credit card payments.
Bank LoansThe restaurant industry is a risky business and banks can be extremely reluctant lender of money to a startup Yes, it’s still risky even though the National Restaurant Association Forecasts 2019 Industry Sales Projected to Reach $863 Billion compared to its 2017 forecast of $798.7. Banks will look at the borrowers account, business records, credit rating, business plan and experience to determine your ability to repay a restaurant equipment loan. In other words they really don’t care about the growth of boutique restaurants. Banks will simply task you out its simply not worth your time or frustration.Ultimately, if you’re a first time restaurant owner, your better utilizing equipment financing. You may also want to pull your credit report before approaching the bank.
Family and FriendsDoing business with family and friends can be a recipe for disaster. If you do seek money from make sure you get everything in writing and make sure that they are are not risking their retirement. In other words make sure that they understand the risks, but if they got the extra money to throw to your new business then why not take it. Another option besides asking friends and family is to put together a business fundraiser on Go Fund Me
Leasing Restaurant EquipmentFinding a lender for restaurant equipment used to be tough for a restaurant startups.that needed wanted to financing. Banks only want to do national funding of established high-volume restaurants based on the restaurants invoices. Banks ignore many of the low dollars deals for the restaurant industry when the average equipment finance agreement is between $3000 to $20,000 with a low monthly lease payment.
Restaurant Start-Up FinancingThe financing solutions and lenders that I am partnered with offer low monthly payments you can afford. You can set up the best option for your restaurant by financing your kitchen equipment for 12 to 60 months lease agreement and some offer no down payment for 90 days. Enabling to earn back your investment, maintain, steady cash flow, and build your business credit rating. The equipment lease I offer is 100% Tax Deductible Section. The IRS guidance under section 179 allows businesses to deduct the full purchase price ever piece of equipment financed. Most businesses are able to deduct 100% of the total equipment costs.
- Fixed Payments. Monthly payments are generally fixed for the entire term of the lease. This is a distinct advantage in times when many financing transactions have floating rates. Knowing in advance what your payments will be enables you to budget and manage equipment dollars for a long time.
- Longer Terms. Many banks only lend money short term, usually 12 to 36 months. The lease arrangements with my parntering banks can be as long as 60 months, and in some cases even longer.
- No Down Payment. Most traditional financing options require a sizable down payment. On cash purchases, this can be as much as 20% No down payment is required on a lease with The Restaurant Warehouse bank partners.
- 100% Financing. Traditional methods of financing usually do not include "soft costs" such as installation and freight. The Restaurant Warehouse lease transactions include both of these thereby allowing you to finance the total package.
- Flexible Payments. The banks partnered with The Restaurant Warehouse finds ways to structure lease transactions to fit the needs of our customers. This gives you the opportunity to make the most of lease structuring variables as to the number and amount of advance payments, purchase options and seasonal or skip payments.
- Simpler Than Bank Loans. The Restaurant Warehouse lease programs and procedures are specially designed to take the red tape out of financing capital equipment for business.
- Purchase Options. Most lease arrangements allow customers the option to purchase at $1.00
- Cash Flow is King. Because of the sizable cash outlay involved in purchasing new restaurant equipment, many businesses lease to conserve capital. Money that could be used to buy inventory, advertising, and hire additional personnel is better spent rather than purchasing equipment that is worth less as time passes. If you are in a business where you have important alternative uses for cash on hand, leasing always wins out in the lease vs. buy analysis.
- Easier Cash flow Forecasting. Restaurant equipment leasing, which is simply dollars-per-month financing, helps an equipment user fit a monthly payment into their budget. Because payments are fixed, users can continue to intelligently budget for the future.
- Tax Benefits. Just as businesses have done for years, a lessee can usually deduct their monthly lease payments as an operating expense. This clearly reduces the net cost of the lease. It's always best to talk to your tax accountant first; however, leasing is generally advantageous to most businesses. Columbia welcomes the opportunity to work with your tax accountant to give you the most tax benefits.
- Additional Lines of Credit. When equipment is purchased with borrowed funds, credit lines with a lender are reduced. When equipment is leased, a business has, in fact, established an additional line of credit with its lessor.
DISCLAIMER: The above is not to be intended as an financial/investment advice, but as a guide on financing restaurant equipment.