Restaurant Equipment Financing
Leasing Restaurant Equipment Offers Potential Savings Compared to a Purchase.No restaurant pays it's staff in advance: they pay as they contribute. It is no different with restaurant equipment leasing. Equipment finance enables you to make a affordable monthly payments as you use the restaurant equipment. The equipment lease is like your restaurant employees. The kitchen equipment can generate positive cash flow to respond to new business startup opportunities. The profits generated from the productivity of the equipment purchase is usually greater than the lease payments.
Why Equipment Finance?Small and medium sized restaurant business owners face the constant challenge of managing cash flow, merchant cash advance and a business line of credit while investing in improvements to operations. Today’s successful restaurants are able to acquire new equipment to keep their new businesses competitive while preserving working capital and credit score. Our lenders, specialists, and financial institution partnership offers multiple funding sources that provide restaurant owners with flexible financing solutions and repayment terms to lease equipment they need without a down payment or collateral.
Leasing Restaurant Equipment Advantages
Restaurant Equipment Leasing Financing Options Provides the Restaurant Industry an Alternative Source of Capital.Restaurant equipment financing frees working capital for productive use (since the money is not tied up in restaurant equipment). For a successful restaurant, bars, food trucks, restaurateur chefs and coffee shops that are a startup business, or any existing restaurant that wants expand, create that dream restaurant, have limited funds for capital to take their business to the next level, leasing equipment may be the best option to protect and preserve the restaurants capital. Financing might be the best options for a under-capitalized wanting to opening new locations or up grading a piece of equipment like a grill.
Cost less than other methods of acquiring restaurant equipment.
Restaurant Equipment Lease Provides a Hedge Against InflationThe leasing payment terms may provide a hedge against inflation, since the monthly payments will be made with cheaper dollars which save your restaurant a lot of money. The China–United States trade war has and will continue to raise the price of the following type of equipment refrigerators, freezers, char broil grills, planetary mixer, stove ranges, knives, ice machines, commercial ovens, dishwasher and fryers along with the the raw materials made in USA restaurant equipment like True Refrigerators and True Freezers. Restaurant equipment financing may act as a hedge against inflation, inflation provides the basis for strong arguments supporting ownership.
Does not appear as a liability on the lessee balance sheet.
Leaves normal lines like a credit card undisturbed.
Permits hedging of restaurant business risk.
Financing New Restaurant Equipment with Warranties Extends the Length of Financing Commercial Kitchen Equipment.In contrast to typical merchant cash advance, business line of credit, bank loan, working capital loan, term loan and restaurant equipment loans, which are generally available only for a period of time that is significantly less than the life of the commercial equipment, leases may be obtained for nearly the total 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. True Refrigeration and True Freezers have a 3-year parts and labor warranty and a 5-year compressor warranty. The result is a reduced cash outflow during the initial period of the restaurant equipment, with the cost spread over a longer lease agreement. The benefit is two fold. First, costs tend to be more nearly correlated with revenues over the entire life of the asset. Second, a discounted cash flow analysis will usually indicate a higher return on investment when cash payments are spread out over the entire asset life.
Leasing and Equipment Finance Provides Exact Amount Financing.Unlike some forms of debt financing that vary in cost as a function of the prime interest rate, lease payments for equipment finance are almost always uniform over the length of the lease.
Restaurant Equipment Financing Allows More Flexible Cash BudgetingThis is an important corollary to the preceding benefit. Many intermediate-term business loans have balloon repayment features, whereby the bulk of the principal is due at the end of the loan and, if the restaurant maintains its credit rating, forms the basis for a new loan. Such refinancing exposes the restaurants to additional financial risk if interest rates and/or the availability of capital. The uncertainty as to availability of refinancing necessitates a more conservative liquidity position. Possible changes in the restaurant owners financial situation, bad credit, recent bankruptcy (and fluctuations in interest rates, if interest is tied to the prime rate) it makes cash budgeting more difficult and can negatively affect the restaurants financial future and force business owners to pay the full purchase price for new equipment or buy used restaurant equipment without any warranty.
Leasing Provides Total FinancingLease loan repayments are usually made at the end of each period, with the start of each period, with the first payment due at the start of the lease the first payment due at the end of the month (or some other period) after purchase. These factors affect the cash flow budget and the timing of cash flows.
Lease options provide restaurant equipment financing for acquisition plus related costs.
Lease restaurant equipment permits 100 percent financing.The total acquisition cost, including sales taxes and delivery and installation charges, may be included as a part of the equipment finance agreement and spread over the life of the lease. These front-end costs may be substantial and thus result in heavy initial cash outflows if assets are purchased.
Leasing Provides Fast, Flexible Financing
May be tailored to the lessee need to be more easily than ordinary type of financing.
Avoids the restriction frequently found in bank loan agreements.Leasing tends to be faster and more flexible than borrowing funds. Your restaurant lease contract and affordable monthly payments may be arranged to meet the seasonal cash flows of the restaurant, and may be tailored to the specific need of the applicant, restaurateur, and lessee. Financial leases is a contract under which a lessee agrees to make a series of payments to a lessor which in total exceeds the purchase price of the equipment acquired. Typically, payments under a financial lease term are spread over a period of time equal to the major portion of the useful life of the equipment. During this initial term of the lease, the contract is not cancel-able by restaurant or leasing company. The lessee is committed to continue leasing the restaurant equipment until the end of the lease.
Section 179 Deduction
Section 179 is a good option for small and medium-sized businesses and borrowers. Any Business that finances less than $1,000,000 in restaurant equipment (new or used restaurant equipment) during the 2020 tax year should qualify for the IRS 179 Tax Deduction. Say $10,000 is the initial costs of a piece of equipment for your new restaurant. By taking advantage of Section 179, you can deduct the entire $10,000 from your net income in the first year you use it. So, assuming you are in a 35% tax bracket, you will have a $3500 tax deduction or discount of $3,500, meaning true cost of equipment is only $6,500. That is good news that is a lot of money to your bottom line now you can reinvest the saving in your restaurant. The Credit Application takes less than 5 minutes and final approval generally takes 24-48 hours.
Do you have a business plan?Do you have good credit? Have you checked your credit report for errors? Do you know your personal credit rating and business credit score? Does your restaurant have a business plan?
DISCLAIMER: The above is not to be intended as an financial/investment advice, but as a pros and cons leasing services guide on working with the quickspark national funding restaurant equipment finance company.