How to Finance Restaurant Equipment

The Advantages of Financing Equipment in the Restaurant Business

Bringing people together over great food while making meaningful connections is what the restaurant business is all about. Running a restaurant can be hard work, full of challenges and obstacles, yet also highly creative and exciting. There is much to consider and plan for: the food, the staff, the ambiance, the location – from the lighting to the plating, every little detail must be executed properly. Much of the success of a restaurant relies on its kitchen equipment. From stove tops to cappuccino machines, it all has to be in top working order and able to stand up to the demanding nature of constant use. Kitchen equipment is one of the most important investments a restaurant owner must make and often the most costly. Before running to the big banks for help, restaurant owners should consider a private lender and the advantages of financing equipment they offer. 

Beyond the Big Banks

It is highly unlikely that a restaurant owner can afford to buy all their kitchen equipment without some kind of financing. An excellent relationship with a bank can be a great advantage. Banks can offer solid financing for many situations. However, for small business owners banks don’t offer the flexibility and service that private financial services can offer, particularly a financial institution that specializes in restaurant financing which can customize plans for individual clients. Financing may involve a line of credit, leasing, renting or a combination of all three.

Leasing

Leasing restaurant equipment works like this: the client chooses the equipment, the finance company buys the equipment and then leases it to the client. The rates and terms of the lease are determined by the length of the lease (usually 2-5 years) and the risks involved. Just about everything, including the kitchen sink, can be leased. The advantages of leasing are: lower borrowing costs, the option to buy when at the lease’s end and less money due on signing. Often there is the option to trade-up during the lease. The Toronto based finance company Econolease, which specializes in restaurant financing, offers this option. In this case, the vendor takes back the original equipment, assigns a trade-in value which is deducted from the cost of the new equipment and the difference is re-calculated into the customer’s monthly payment. One lease may involve equipment from a variety of vendors. 

Renting

Occasionally, especially with big ticket items, a restaurant owner may not want to commit to a long term contract. For instance, if there was a top-of-the-line $40K combi-oven being considered, that could be a risky commitment for an untested product. In this case, renting may be a better option. Renting comes at a higher cost, but with shorter terms and an open contract that the client can walk away from after only a year.

Line of Credit

If renting or leasing doesn’t fit the business plan or the owner is unsure of what equipment is right, a pre-approved line of credit is another terrific option.
There are many advantages to financing restaurant equipment. Often the best solution involves several different options, all wrapped up in one, affordable package.

What is a Lease?

Do I have to give my oven back after leasing it?

No, you do not have to give your equipment back at the end of your lease term. Our leasing program is lease-to-own. Our lease-to-own program means you will have a fixed monthly payment which is 100% tax deductible. Lease terms vary depending on customer needs and can be as long as 66 months for established businesses.

At the end of your lease term, you must exercise your purchase option, which is a one-time payment that can be structured as either 10% of your original equipment cost or a flat payment of $10.00. Once this purchase option is executed, title and ownership of the equipment will be transferred to you, which means that you then own the equipment free and clear.

There are no hidden fees or costs associated with your lease; your entire cost, including your fixed monthly payment, your initial payment, and your purchase option is presented to you upfront before signing. This allows you to budget for your business costs upfront and ensures you will have sufficient cash flow on hand for all of your variable business needs. Financing your equipment through Econolease will not affect the manufacturer warranty on any of the equipment you choose to lease.

Initial payments on leases are generally your first and last month’s payment in advance but can be as low as one monthly payment upfront.

All lease-to-own agreements are open contracts which can be bought out at any time without penalty.

Financing your equipment through Econolease is a quick and easy process that can be completed start-to-finish in as little as one business day.

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