Restaurant equipment financing and equipment leasing can be arranged for such assets as bar management software, POS systems, commercial kitchen equipment, display cases, bar chair, booth, freezer, range, sanitation system, fryer, mixer, bar stool, oven, air conditioning system, cooler, and so on.
If you are in the process of trying to finance a piece of restaurant equipment that’s not listed above, give us a call right away so we can get the asset qualified with one of our lending sources.
The main qualifying factor for restaurant equipment is cash flow. The more reported cash flow a restaurant has, the easier it will be for the business to secure commercial equipment financing for any new or used equipment the business may require. When reported cash flow is tight, the equipment financing companies will tend to reduce the loan to value amounts provided down to a low of 50% for new equipment and even lower for used equipment.
Because of the high turnover rate of restaurants as well as the out right business failure rate, equipment financing and leasing companies will continue to be more focused on established cash flow versus the asset value due to the low amount of recovery that can be expected in the resale market in the event of a financing default.
For the averaged sized restaurant operation, its likely that cash is going to be required in the transaction, even for new equipment.
Equipment financing for restaurants is provided through institutional bank loans or equipment leases. Many of the loans provided are through government backed loan programs where part of the loan principal is insured by the government to reduce the risk to the lender of loss and increase their ability to extend loans to small business owners in the restaurant business.
Equipment leases can be secured in the form of an operating lease or a capital lease. Leasing terms for used equipment may only be for 24 months to 36 months with terms for new equipment ranging from 48 months to 60 months on average.
Equipment that is purchased through a private seller can still be financed after the fact by an equipment financing or leasing program provided that there is a strong paper work trail to show the exact payment of funds, the source of the payment, and the timing of the transaction.
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