Are you planning to open a brand-new restaurant in your town or city? If yes, then as an impending business investor you need funds to acquire the restaurant equipment such as a cooktop, grills, furniture, refrigerators, and much more. Oftentimes, leasing restaurant equipment can become a viable option then buying especially for startups as it can eliminate the risk of loss at the time of the business collapse. Buying new equipment and machinery for a restaurant can also be an expensive chore as you may not find adequate funds to invest in the costly stuff at the initial stage of business.
Leasing is a simple and hassle-free process than bank financing:
When it comes to arranging a huge amount of finances through the banks you may have to cope with a lot of formalities. Banks these days have complicated financing programs that are accompanied by strict terms and conditions so it would be a tough challenge for you to arrange funds for purchasing the equipment to place inside your newly opened business. Instead of financing, leasing can become a practical and fast approach for buying the equipment without unloading a large amount of cash to buy the stuff from the market.
Leasing requires less capital:
One of the best things about leasing is that it requires less capital to buy the equipment that you require for the startup restaurant business. Even if you do not have a lot of cash in hand, you can acquire the equipment without making an initial investment of money. Unlike financing a loan from the bank, leasing does not involve down payments, collaterals, third party guarantees, and hefty charges so it can prove a cost-effective solution for your business and you also not required to qualify for the condition of having good credit to lease the restaurant equipment.
Leasing is financial support, not a burden:
There is no doubt to say that leasing is financing support but not the burden because you might be able and comfortable to pay a reasonable amount of monthly payments in lieu of the equipment leasing to the lessor instead of paying a hefty amount of loan interest to the bank. A bank loan repayment will include basic loan amount plus interest and charges so it can increase the number of monthly installments but leasing will not require any interest as you only have to pay rent for using the goods. Leasing will also not leave you with distress when it comes to changing the restaurant equipment frequently as you can easily upgrade it with a new leasing contract but replacing the financed equipment is difficult as you have to clear the loan first before financing new equipment.
Leasing will keep your cash reserve:
Another factor that can influence you for leasing restaurant equipment for starting a business is that it can keep your cash reserve to be used for other business needs. For example, if you have a small amount of cash in hand then you do not have to invest it for leasing so you can utilize it for other important needs such as paying restaurant bills, wages to workers, and buying a coffee machine or juicers etc. Leasing does not require making a down payment prior to the approval so you can get the equipment at lease without any cost and investment that will enable you to keep the cash flow smoothly to operate the business efficiently.
Leasing is good to keep the equipment for short-run:
Leasing is also considered as a good solution of acquiring equipment if you want to keep it for a short period. For example, at the beginning stage of the business, you can use the restaurant equipment to serve your customers but at the end of the lease, you can return the equipment to the leasing provider that you do not need. In bank financing, you cannot return the equipment to the lender or cannot sell it until you clear the complete loan amount. You can also get several end of lease options if you want to return or to keep the equipment with full financing power and can also buy it at fair market price from the leasing company.
Leasing is tax-deductible:
In order to reduce the tax burden on your restaurant business income, you can also gain monetary advantage from leasing the equipment. It will show as an operating expense on your statement when you pay the monthly rental amount to the lessor so the amount you have paid can be considered as tax deduction which means that you can save the tax to keep an extra income. However, you cannot get a tax deduction for the depreciation of the leased equipment but can enjoy the nice advantage of deduction by showing the expense rather than finance in the bank statement.