Restaurant equipment financing

Published minimums, checked

Getting a kitchen funded without overpaying

1. Split the list into resaleable and not. Cooking equipment, refrigeration and dishwashers finance easily; joinery, extraction ducting and anything welded into a leasehold usually does not.
2. Decide lease or loan. A lease keeps the asset off your balance sheet and often has a lower monthly cost; a loan ends with you owning equipment that still has years in it.
3. Check the published minimums before you apply. Three lenders in this record publish a bar low enough for a business under a year old, and the rest either want more or will not say.
4. Price the deposit. Equipment facilities frequently want ten to twenty per cent down, and t. Price the deposit. Equipment facilities frequently want ten to twenty per cent down, and that number moves more of your opening cash than the interest rate does.

Why the equipment lender is easier than the bank

An equipment financier holds a specific, identifiable, resaleable asset. If the restaurant fails, the combi oven is worth something to the next restaurant, and there is a functioning secondhand market to prove it. That security is why the published minimums on equipment pages sit lower than on unsecured lending: SBG Funding, which asks for six hundred FICO and three hundred and fifty thousand dollars of annual revenue for its small business loans, publishes a separate equipment page asking for five hundred FICO and a hundred and fifty thousand dollars of revenue. Same lender, same year, different risk, different bar, both published.

New restaurants and the trading-history problem

Almost every lender in this record that publishes a minimum time in business asks for at least six months, and Taycor Financial asks for two years on most of its leasing programmes. A pre-opening restaurant clears none of them. The routes that do exist are a personal guarantee against a stronger personal credit file, a larger deposit, a vendor finance arrangement offered by the equipment supplier itself, or a lender that publishes no minimum at all and therefore has not ruled you out in advance. All four are worth asking about together rather than in sequence.

What restaurant equipment financing should not be used for

The temptation with a facility secured on equipment is to size it to the whole fit-out and use the surplus for opening working capital. That converts a well-secured, well-priced facility into an unsecured one at the same rate, and it means the day the business is short of cash it has already spent the asset it could have borrowed against. Fund the equipment with equipment finance and the opening months with something priced for that job, even if the second facility looks more expensive on the day you take it.

Common questions

Can I get restaurant equipment financing before I open?

It is harder and it is not impossible. Every lender in this record that publishes a minimum time in business asks for at least six months, so a pre-opening business is looking at a personal guarantee, a larger deposit, supplier finance, or a lender that publishes no minimum and therefore has not excluded you in advance.

Is leasing or financing better for restaurant equipment?

Leasing usually costs less each month and ends with you owning nothing; a loan costs more and ends with an asset that has residual life. For equipment with a long working life, such as refrigeration and cooking lines, ownership often wins. For anything that will be superseded or heavily worn in five years, leasing frequently does.

Does used restaurant equipment qualify?

Often, and several lenders in this record keep a live equipment page that covers used assets. Expect a shorter term, a lower advance against the price, and a lender that cares about the age and make because it is thinking about what the asset will fetch if it has to sell it.

By borrowing product

• merchant cash advance: what the lenders who offer it actually require
• equipment financing: what the lenders who offer it actually require
• invoice factoring: what the lenders who offer it actually require