What is Catering Equipment Finance?
Equipment is a major outlay for hospitality, restaurant and catering businesses. Kitchen appliances, cooking equipment, refrigeration, furniture … it all adds up. Catering equipment finance is a way of spreading the cost of these purchases over a number of affordable monthly repayments, relieving the pressure on your business’s cash flow.
How Does Catering Equipment Finance Work?
Here’s a quick overview:
Term and Repayment:
Catering equipment finance arrangements involve affordable monthly payments, including interest and VAT. These are made over a longer term, usually up to five years, which keeps your outgoings down. Depending on your agreement, you may be able to pay off the remaining loan amount early if you choose; however, some lenders will add a fee for this.
Lender Requirements:
When you apply for catering equipment finance, the lender will carry out the standard security and credit checks and ask you to provide documentation about your business. This might include a balance sheet and cash flow forecast, accounts and income statements over multiple years, plus any customer agreements you have in place.
What are the three main types of catering equipment finance?
Hire Purchase:
The lender buys the equipment upfront and you pay off the purchase with a monthly repayment plan that includes fixed interest and VAT. Once you have made all the repayments, the equipment is yours. You’ll usually have to pay a nominal fee to take ownership.
Operating Lease:
Here, the lender also buys the equipment, but your monthly payments don’t count towards ownership of the item. Instead, you are paying to keep and use it for the term of the agreement. When the term ends, you can continue the lease agreement, return the item to the lender, or sell it on and keep a percentage of the proceeds.
Finance Lease:
With this type of lease arrangement, your repayments are calculated based on the lender’s evaluation of the predicted residual value of the equipment. This usually results in lower payments. At the end of the term, the lender will sell the equipment and you can either terminate the agreement, rent a replacement item, or opt for an upgrade.
Which model is best for you will depend on your specific needs and the type of assets you want to acquire. A finance lease may be useful for more technical equipment that should be regularly upgraded. Or you may prefer a hire purchase or operating lease for items that will last a long time if made and maintained well.
What kind of equipment can I fund?
Specialist catering lenders offer financing for all kinds of equipment; from pots, pans and utensils, to individual fridges and cookers, or entire kitchen refits including design and construction work. The loan amount and interest rate will depend on how long your business has been running. The repayment schedule can usually be adapted to your cash flow and annual cycle.
Fund Your Catering Equipment
Looking to fund new or used catering equipment? We’re here to help.
Use our enquiry form to submit your details or contact our team directly to discuss your catering equipment finance requirements.
At Wenham Specialist Finance, we provide tailored funding solutions designed to support your business growth with expert guidance and a personal approach.