Restaurant Equipment Financing Options & Your Business (2022)4 min read
Buying and maintaining equipment is an essential part of operating for every restaurant owner. It can even be necessary to meet local and industrywide business codes. Restaurant Equipment Financing could be the right option to cover this significant expense.
Restaurant Equipment Financing: The Best Option for Restaurant Equipment Needs
Suppose you want to purchase equipment to upgrade to the latest restaurant industry technology or replace old commercial kitchen equipment. A restaurant equipment financing loan may be an excellent way to fund your needs and grow your foodservice business.
Equipment financing reduces the burden on cash flow
Not all business lenders provide restaurant equipment financing, whereas others specialize in equipment financing, specifically for the restaurant business. As you explore small business loan options, you will need to search for the financing solutions that will get you your equipment with suitable monthly payments that won’t hurt your cash flow.
In this post, we’ll answer the following questions and more about this valuable service:
What Are Restaurant Equipment Loans?
Restaurant equipment financing is a kind of debt financing that assists restaurant owners with getting the equipment they need to run a successful restaurant.
The concept is that an equipment financing lender provides you with funding so that you can purchase that equipment immediately. Then, you can repay the principal amount plus the interest over the anticipated life of the restaurant equipment.
The equipment secures the loan
The restaurant equipment serves as collateral; therefore, if the business owner fails to pay the monthly payments on the loan, the lender will take back the equipment, which the lender will undoubtedly include in your repayment terms.
The requirements to apply for restaurant equipment financing are not stringent. As equipment financing is self-secured, it’s much easier to qualify, even with bad credit.
The process is fast for restaurants
Restaurant equipment financing is fast. Restaurant owners can apply online for this kind of equipment financing, which takes about a few minutes to get pre-approved.
What Are Typical Restaurant Equipment Financing Qualifications?
Restaurant equipment financing qualifications are less stringent than a traditional bank loan.
Usually, businesses that qualify for restaurant equipment financing have:
- With annual revenue of more than $250,000
- Personal credit rating of 600 or more
- A time in the business of one year
What Are Typical Financing Expenses for Restaurant Equipment?
What your financing will cost depends on the full purchase price of the equipment you want and the rate you qualify for. It doesn’t matter if it’s new kitchen equipment or to upgrade your point of sales system with newer equipment.
Rates as low as 3.5%
Restaurant equipment financing rates start from 3.5% at their lowest up to around 20-30%, depending on the type of equipment and possibly a personal and business credit score.
How To Apply for Restaurant Equipment Financing Options:
A restaurant equipment loan is just the best move when you invest in or purchase new equipment. This capital finance option could provide very reasonable terms if you are working with a less than stellar credit report.
As the restaurant equipment secures the loan and offers financial protection for the restaurant equipment lenders, less qualified, small business owners can access long repayment periods and lower interest rates on a term loan.
Keeping this thing in mind, let us talk about how to apply for a restaurant equipment financing term loan:
Step 1: Choose an equipment finance lender
Before diving into the application process, make sure that you’ve already researched some equipment lenders you wish to proceed with. The more lenders you apply to, the more your credit score will be susceptible to hard inquiries; therefore, planning on which financing companies you’ll work with and give credit authorizations to is vital.
Step 2: Gather all the Documents Needed
Before applying, you will also need to answer the following questions: What type of restaurant equipment are you planning to buy? What is the price of the equipment? What loan term will help maintain my cash flow best?
Answering the questions above will be vital in equipment finance applications.
Each lender is different when it comes to what documents they’ll require from you, but you can bet they’ll ask for the invoice of the equipment you’re looking to purchase, which should include the vendor’s company information, the purchase price, and what forms of payment they’ll accept.
Other documents an equipment financing lenders may require are your business license, credit report authorization, identification, and business bank statements, to name a few.
Step 3: Apply
After researching lenders and picking the equipment you want to purchase, all that’s left for you to do is apply.
The application process is fast, and you can do it within a few minutes. You can either fill out our one-page online application. Or call us to guide you through the process.
It’s typical to receive final approval within a business day, and the whole process generally takes around 3-10 business days.
It doesn’t matter if you are new to restaurant equipment loans or have used equipment financing before; financing your restaurant equipment is a great way to leverage your credit and reduce the impact a large purchase can have on your cash flow.
Going into credit is always a risk. You will have to crunch some numbers (including any tax benefits)to ensure that the initial costs, including any down payment and regular monthly payments, are worth the temporary hit to your cash flow in the long term.
If you need new restaurant equipment for your business, this is one of the most accessible loan types, has great interest rates, and helps preserve working capital for day-to-day business operations.