Why equipment approves when working capital does not
Unsecured working capital is sized against deposit history, and a startup has none. Equipment financing is sized against an asset that can be recovered and resold, so the absence of revenue is not fatal.
This is why the kitchen package is almost always the first financeable piece of a new restaurant.
What a startup file needs
The file is shorter than an operating restaurant's, and every piece carries more weight.
- /A detailed vendor quote including delivery, installation, and freight, all of which are financeable
- /The executed lease, which sets the term the lender is willing to underwrite against
- /Personal credit and a personal financial statement, since there is no business history to review
- /A simple use of funds and opening budget showing the equipment is part of a funded project, not the whole plan
Expect a shorter term and a down payment
Operating restaurants routinely see 72 to 84 month terms. A pre revenue file commonly lands at 24 to 60 months with 10 to 20 percent down.
That is a payment difference, not a rejection. On a 90,000 package, the shorter term raises the monthly amount, so build the higher figure into the opening pro forma rather than the optimistic one.
Sequence the requests correctly
Equipment first, while the quote is fresh and the lease is signed. Construction and leasehold improvements go on a separate buildout facility with its own draw schedule.
Working capital comes last, after 6 months of deposits exist. Trying to fund pre opening payroll with unsecured capital before opening day is the most common reason a startup file stalls.
Buy used deliberately
Used refrigeration, ranges, and prep tables can cut a package by 30 to 50 percent and are financeable through dealers.
Buy the hood, the fire suppression, and the dish machine new. Those three are the ones that fail inspection, and a failed inspection costs more than the savings.
Calculator
Equipment payment and total cost
Enter the quote, the rate you were offered, and the term. The payment is the standard amortizing payment, and the total cost is what leaves the business above the amount financed.
Programs commonly cover 80 to 100 percent. Leave at 0 if none is required.
Use the rate on the written offer, not an estimate.
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Tell us about the operation and the results open up.
The math above runs on your inputs. Send the request and the figures unlock on this page, a specialist reviews what you entered, and you get written options to compare. No credit application, no hard pull.
We email you a copy of these figures. They are estimates for planning, not an offer, a quote, or a preapproval of any kind.
The arithmetic
payment = P x i / (1 - (1 + i)^-n), where P is the amount financed, i is the annual rate divided by 12, and n is the number of monthly payments. Total cost = (payment x n) - P.
Sources
- 1Amortizing payment formula: P x i / (1 - (1 + i)^-n)Standard time value of money identity. The same closed form used by the PMT function, with i as the monthly rate and n as the number of monthly payments.
- 2Bank prime loan rate, the base most business term financing is priced againstFederal Reserve, H.15 Selected Interest Rates. Published daily by the Federal Reserve. Enter the current prime rate when pricing a variable rate offer.
- 3Annual percentage rate definition, 12 CFR 1026.22Consumer Financial Protection Bureau, Regulation Z. APR is the nominal annual rate that discounts a payment stream back to the amount advanced. We solve it numerically from the payment schedule and multiply the periodic rate by the number of periods per year.
Estimates, not offers: Amounts, terms, and funding times are estimates based on programs commonly available in food service. Actual terms vary by program, lender underwriting, time in business, revenue, and credit profile. Nothing here is an offer of credit or a guarantee of approval.