Restaurants face many expenses. One of the largest upfront costs is the purchase of equipment and machinery. There are other funding options than bank loans for restaurant owners with poor credit scores.

Restaurant equipment financing will allow you to get the funds you need to buy the tools you need to optimize and jumpstart your business. This guide will help you learn everything you need to finance restaurant equipment – even if your credit score is not great.

What is Restaurant Equipment Financing?

Restaurant equipment financing allows entrepreneurs and small businesses to buy equipment, machinery and supplies to run their business smoothly.

Equipment financing can be used to finance large investments, often over several years.

Both restaurant startups and established businesses are able to use equipment financing. Equipment loans are easy to obtain, have long terms and minimal credit requirements. There are also very few collateral requirements.

How Restaurant Equipment Financing Works

Equipment financing is a way to finance the purchase of equipment, as well as the repayment of a loan over time. This allows you to purchase the equipment, make payments and generate revenue simultaneously.

Equipment financing for restaurants can be used to meet your equipment needs. Loans typically cover anywhere from 80% up to nearly 100% of the equipment.

Once you have secured financing, your materials can be purchased and used immediately. Equipment financing loans are usually broken down into fixed monthly payments over a period of time. This allows you to accurately forecast your cash flow.

What’s the best thing for long-term restaurant owners? After you repay your loan, the equipment will be yours in full. You can then sell it or use it for an upgrade.

Equipment financing is an affordable option for small businesses with limited credit or assets of high value. This is one reason equipment loans are so popular with startups and young restaurants.

How can you get financing for restaurant equipment with bad credit?

Yes! Even with poor credit, it is possible to finance restaurant equipment. Although banks may have strict criteria, online lenders might be able offer flexible financing options.

Banks typically require strong credit scores, strong income, and a minimum 2 year business history. Online lenders can be more flexible when financing equipment. Online lenders are more likely to approve equipment financing for newer businesses than banks, and will be easier to work with those with lower credit scores.

How to get a loan for restaurant equipment with bad credit

Your chances of getting approved at a bank or other traditional institution are less likely if your credit score isn’t in the best place. An alternative is to use an online lender. Online lenders are easier to use, offer faster funding times and more importantly, can provide loans that are accessible.

While the process is not as rigorous or stringent as applying for a loan from a bank, still requires you to meet certain qualifications.

Are you looking to finance restaurant equipment? National Business Capital allows you to easily compare loan offers from multiple lenders. These are the essential requirements.

No Minimum Credit Score

A good credit score is a benefit for getting lower interest rates and better financing terms. However, it is not necessary for equipment financing. National Business Capital allows you to waive your credit score requirements if you have a business that is less than 6 months old and has an annual revenue of at least $120,000. You can also apply for funding with flexible credit scores if your business is new.

Minimum 6 months of Business History

National offers solutions for businesses that are less than six months old, even though most lenders require at least one year’s business history. Entrepreneurs and start-ups can have an advantage when it comes time to launch their business.

$120,000 Annual Sales

Annual Sales are another way that lenders determine whether you are eligible for equipment fundingspan styling=”font-weight 400 ;”>. A restaurant equipment loan can be obtained for owners with a minimum of $120,000 in annual gross sales or 10,000 monthly gross sales.

There are ways around this requirement, even if your restaurant is a start-up. If your FICO score exceeds 650, you might be able to waiver some of these requirements.

The Benefits of Equipment Financing

Business owners can use equipment financing to buy the machinery they need. Here are some ways that funding can help you achieve your long-term goals.

Get started using the equipment immediately

Equipment financing allows you to immediately start using the equipment while spread out your loan payments over many years. You can avoid any setbacks in opening and managing your restaurant by not having to borrow all of the money you need to finish your kitchen or start operations.

No Collateral Requirements

Equipment financing doesn’t require additional collateral. The equipment acts as collateral for your business loan. This will help you to reduce the financial risk associated with opening or growing your restaurant.

Cost-Effective

Equipment financing is a great option because you can save money long-term and build equity in your equipment. You can sell your equipment and keep some of the investment. Equipment financing is a better option than leasing for many restaurant owners.

Accessibility

Equipment loans for restaurant owners are easier to obtain than other forms of financing. The equipment you purchase acts as collateral and is therefore more easily accessible. It is easier for new and small restaurant owners to get funding. Working with online lenders can also be a great way to get around credit requirements.

Time-Saving Alternative

Equipment financing can be done through an online lender. This is usually faster than applying for and receiving approval for bank loans. Sometimes, online lenders have allowed businesses to receive funds within hours of submitting their application.

Types Of Restaurant Equipment Loans

It is important to understand your options with the various equipment loans available. Here are some examples of equipment loans that are most commonly used in restaurants.

SBA loans

Small Business Administration (SBA), loans are government-backed financing options that offer special benefits for small businesses. To protect against default, the loan is issued by a network lenders and backed by federal government.

SBA loans offer greater security to lenders which is particularly important for allowing businesses to get lower interest rates span styling=”font-weight 400 ;”>.

SBA loans are available at low interest rates and offer many term options. Up to $5 Million These include start-up costs and working capital requirements.

Be aware that SBA loans come with their own requirements. Learn more about the SBA requirements during the application process.

SBA 7 (a) loans

SBA 7(a), which are the most sought-after SBA loans, is one of the most in demand. These loans are available in high funding with loans up to $5,000,000 that can be used for various business and equipment purchases. Businesses have the option to refinance existing equipment loans with 7(a). You can also expect a long-term repayment term of between 10 and 25 years.

SBA504 loans

Another popular, long-term, fixed rate SBA loan is the 504 loan. Funding available up to $5,000,000 This loan can be used for major assets such as restaurant equipment, and supports economic growth.

Term Loans

You should be able to picture a typical loan arrangement. The lender will give you a lump sum upfront. The loan is then repaid over regular payments over a predetermined time period. This can be either immediate or long-term loans (mostly over 5 years).

Term loans can be a great way to finance a large project or long-term business plan. Equipment financing will require you to know how much the equipment will cost. Lenders will then be able approve the equipment and guarantee the loan. The lender will be able to recover the equipment if the borrower is unable or unwilling to pay the loan.

Business Line of Credit

The business line of credit can be used in the same way as a credit card, but has higher funding limits. You are charged interest only on purchases, which is usually cheaper than the interest rates.

Flexible financing is possible with this credit. You can use it to purchase any business expense you choose. This is particularly useful for unexpected expenses and short-term financing. A revolving credit card line allows you to continue accessing capital until you have paid off your balance.

Learn More About Financing Options for Restaurant Equipment Through National

Restaurant owners have many options to help them manage their initial costs. Online lenders are a great option for restaurant equipment financing. They can approve loans faster and with more flexibility.

Fill out the Free Application at National Business Capital to Get Started. Find out What Options are Available for You Today.