When beginning your business, one of the most costly expense items are the devices you will require for your Commercial Kitchen Supply. Regrettably, the steep prices can be quite challenging for your working capital. Thankfully, there is hope, even for small business owners. A great way to acquire the kitchen supplies, without spending too much cash, and helping to improve your overall net income is to lease your restaurant equipment. To help you decide if leasing your kitchen furnishings is the right option for you, make sure to weigh the advantages and disadvantages of your business.
• Spending Less Capital
When renting restaurant equipment, you now have more access to the money you need to get your business up and running, which is incredibly helpful for those who don’t have a lot of money to work with from the beginning. Unfortunately, not everyone can afford a considerable lump sum upfront, but you may be able to provide a monthly payment.
• You Don’t Need Perfect Credit
One of the joys to leasing is the ability to rent without having picture perfect credit. Many restaurant supply companies offer options for those even without the best credit history, which can be a substantial perk to many business owners. This is also great if you are starting out and haven’t built substantial credit.
• Option to Buy
Many leasing companies offer a rent-to-own option, which means, at the end of your contract, you can put all the payments you have made towards purchasing the required equipment outright. Rent-to-own is an excellent option for any items you plan to keep throughout the life of your business.
• Tax Deductions
Although it depends on the specific leasing agreement and how the IRS decides to classify it, in many cases you can deduct your leased equipment on your taxes. Think of it this way, when you purchase an item you are paying all the taxes upfront. However, when you are renting, you are paying taxes each month. This added tax benefit, in the end, could help to negate the overall price for your appliances.
• It Doesn’t Cover Everything
While leasing can help to finance your new business, that doesn’t mean everything you want to rent will be available for you to rent. For example, daily supplies, dinnerware, and other materials are not readily available for rent and if you can’t get the money you may be out of luck. Typically, if you can get the money to invest in your commercial kitchen supply, you should always purchase over leasing.
• Additional Fees for Terminating Early
Sometimes you may find you no longer require the equipment you are renting before your lease terms are up. If so, you will most likely have to pay additional fees for terminating your contract early. Therefore, instead of having the option to sell the equipment for its equity (like you would be able to if you bought the supplies), you will most likely end up paying more to rid yourself of the device. Be sure to read the fine print on this before signing any lease agreement.
• Higher Interest Rates
While buying does offer the advantage of not having to pay interest rates, leasing isn’t the same and, unfortunately, while you may not be required to have the best credit to rent the equipment you need, it can affect the type of interest rates for your lease.
If you’re interested in leasing commercial restaurant equipment, submit an online lease application today for a flexible and easy way to use the restaurant equipment you need without spending a chunk of money buying it outright! We have financing plans available for 13 to 60 months! So, get online and start saving money by leasing today. For more advice on the advantages and disadvantages of leasing your commercial kitchen supply, contact the restaurant supply experts at Gator Chef today.