If you are planning to start your own restaurant business, one of the biggest challenges you may face is equipment financing. Purchasing all the equipment you need (stoves, grills, coolers, tables, chairs, cash registers, etc) is certainly a big investment.
Perhaps you may also think about buying second hand devices but don’t forget to consider the risks as used devices may be prone to breakdowns and you could end up shelling out more cash to get them repaired or replaced.
You may ask, is there a better means of financing my restaurant business? The fact is that many restaurateurs were able to establish their own place through business equipment leasing. Since there is no need to purchase brand new or second-hand equipment, you can save your available cash on other important expenditures while furnishing your dining place at the same time.
How Business Equipment Leasing Works
An equipment lease is a type of loan arrangement between a lending company and a business owner. Once approved for a lease, the lender will provide the necessary funding to pay the equipment vendor where the equipment or devices have been acquired. Sometimes, an equipment vendor may offer to provide the loan with the agreement that they will be the sole supplier of all the devices or machinery that the business owner will need.
In any case, the business owner can obtain the devices/machines/even vehicles necessary with the restaurant operations without making an upfront payment. An equipment lease does not require down payment and comes with flexible repayment terms. Thus, the business owner can choose a repayment plan that is most applicable for its financial situation.
Benefits of Restaurant Equipment Lease
No down payment required. Payments can be submitted in a monthly, quarterly or annual basis, depending on the type of lease package you obtained. That means you can save your start-up capital on other expenses without spending a cent on your restaurant equipment until the start of your repayment period.
Tax benefits A restaurant owner may be eligible to claim tax deductions if he/she decides to return the leased equipment at the end of the lease term. Don’t forget to ask your attorney regarding lease tax benefits.
Use only the best equipment. A limited budget may force a restaurant owner to purchase cheaper brands or second-hand equipment to save money. Through equipment lease financing, such a risky move to cut costs is unnecessary. You can choose the newest models of devices in the market plus the option to upgrade when you renew your lease contract.
Free up your cash flow. Lease payments are actually considered as operational costs because you get to use the devices as you pay for them in phases. Hence, you can save what’s left of your business budget for emergencies or to ensure the availability of your cash fund.