Category Archives: Payment and Financing

Tuesday Tip: Equipment Leasing

If you are looking to buy or replace a piece of equipment, you may be hesitant to make the leap right away. Finding a good piece of equipment can get pretty pricey! But fear not, there are options out there, which brings us to our Tuesday tip for this week: Equipment leasing.

Leasing equipment with Central is easy. The chart above says it all. The benefits to leasing are:

  • Free up working capital for other expenses
  • Lease payments may be 100% tax deductible
  • Flexible leasing programs available
  • Financing available
  • Fast and liberal credit decisions mean no time wasted waiting to get approved

If you are interested in learning more about leasing equipment with Central, click here. Or call us a 1-800-215-9293 to speak with one of our expert Product Consultants!

To Lease, or Not To Lease? That is the Question…

People lease all kinds of things from cars and homes to furniture and electronics.  It’s the modern tool used by businesses to gain the use of equipment and furnishings.

Leasing helps foodservices and restaurants in a variety of ways; one of those ways being the ability to avoid a high capital expense all at once.  Ownership of equipment doesn’t produce revenue; it is actually the use of that equipment that makes sales.

Really, it all comes down to what you’re comfortable with for your foodservice establishment and what is the best fit for you.  As with anything, there are risks.  Some risks are worth taking, while others aren’t.

“It’s best suited for restaurants that are existing,” said Product Consultant Greg Otterman about leasing.  “They want to upgrade their equipment and they want to avoid a high capital expense all at once.  So leasing to own works perfect to get the new energy efficient equipment.  Have a low capital expense and save energy too.”

Upfront Costs and Freeing Working Capital

Restaurant equipment costs can add up and sometimes businesses just don’t have all the money upfront to buy new equipment.  Or, even if they do have all the money upfront, sometimes that money may really need to be used for something else.

When on a tight budget, you evaluate what you need and what you don’t need—but sometimes businesses make sacrifices on purchases that hurt them in the long run such as buying a lower quality item that isn’t as efficient, or choosing one without needed features.

This is where leasing comes in.

Think back to what was mentioned at the very beginning—it’s the use of equipment that produces revenue, not the ownership.  You don’t buy a new piece of equipment for the sake of buying it, you’re buying it because you need it.

Spending thousands of dollars on something that isn’t exactly what you need can hurt your business.  Leasing equipment can get you the product you need without a large upfront cost.

“When equipment is leased, instead of exhausting cash accounts on fixed assets, it frees up capital for other expenses,” said Missy Fishburn, leasing and credit analyst at Central.

I’m Ready to Get Started…Now What?

“Once a completed application is received, it is forwarded to one of our authorized lease companies,” Fishburn said about how the process works at Central.  “We usually have a decision within 24 hours.  Most of the time less.  The upfront cost is going to depend on the customer’s creditworthiness.  It usually equals out to one or two upfront payments which is applied to the lease.”

Depending on credit, there may be a high interest rate involved with the lease. At that point, some customers go through with the lease while others don’t. A high interest rate may be a deal breaker—and that’s when you have to take a step back to weigh the pros and cons.  You may find in some circumstances leasing with a high interest rate is more efficient than not getting a piece of equipment at all.

A Few Other Benefits to Help Make a Decision

  • Better Terms: Leases can usually be extended at fixed rates over a longer period of time than conventional bank financing without large down payments
  • Cleaner Balance Sheet: Lease payments may be entered as footnote items on a balance sheet and may not increase your liabilities as a loan does.  This is important to obtain additional credit.
  • Competitive Rates and Terms: Some programs include seasonal plans, deferred payments and 12 month leases
  • Conserves credit lines for other use
  • Helps Overcome Budget Limits: Since a lease is generally treated as an expense rather than as a capital expenditure, room can often be created for monthly payments
  • Leaves Bank Lines Untouched: Normally a lender will not reduce a credit when equipment is leased.  However, when the equipment is financed, it consumes available credit.
  • Most have no penalty for early payoff
  • Simplified Recordkeeping: One monthly payment covers the entire cost of the equipment
  • Tax Advantages: Lease payments are usually considered a pre-tax business expense and qualify for the Section 179 deduction

For more information about Central’s leasing options or to get started, visit our Leasing Page, or contact a Product Consultant at 800-215-9293.

Thanks to Missy Fishburn and Greg Otterman for their help on this blog.

Are happy thoughts key to ending recession?

Maybe Peter Pan had it right – maybe thinking happy thoughts is the key to rising up out of the recession.

Reports this week show that consumer mood has given stocks a boost. According to Chain Leader:

The stock market rose for the first time in a week Tuesday as unexpectedly strong data on consumer confidence sparked optimism that spending by Americans could support a hoped-for economic recovery in the second half of the year.

Citing a bunch of numerical data that means absolutely nil to me, the report went onto describe how consumer sentiment is at it’s highest since September, and investors hope resilient consumers will increase spending in time for the back-to-school season in late summer, helping manufacturers and retailers boost their depleted earnings.

Obviously, there is only so much consumer confidence can do to repair the state of the economy. But for restaurant operators, it could be a sign that banks will begin to ease up on lending as the markets rebound.

In a panel discussion at the recent NRA Show in Chicago, Bernie Siegel, founder and chairman of Siegel Financial Group and NRA Show panelist, said the key to staying afloat is to getting banks to start lending again.

He advised operators to seek financing from smaller, regional banks, as opposed to those with more than three branches.

In addition, the SBA offers a number of online courses aimed at helping small business owners obtain financing and develop a business plan. The SBA announced recently it will guarantee up to 90% of a loan submitted under several of the administration’s small business programs.

And, let’s not forget Obama’s economic stimulus package. Millions of dollars are still up for grabs in federal foodservice equipment grants for K-12 schools.

The government hopes to begin awarding the school foodservice grants beginning June 8. State deadlines to apply are approaching – in just Arkansas, Kentucky and Missouri (whose application deadlines are next week) almost $4 million in grants will be awarded. For more information and to get a state-specific application, CentralRestaurant.com

Buy now…pay later! Central launches Bill Me Later for phone and web orders

Things are tough right now! But maybe you’re old clunker of an ice machine can’t wait for the stimulus package to clear the house and the senate…in that case, Bill Me Later might be perfect for you.

We launched this new, flexible payment option this week for phone and web orders. It takes just a few seconds to apply when you’re ready to check out. You don’t have to send in any forms OR wait for approval. Depending on your unique terms, you’ll be billed for your purchase at a later date.

And future purchases are even easier – after your first purchase is complete, you’ll receive a welcome message from BillMeLater.com. You can even set up multiple users pre-set spending limits. It just requires a User ID and password.

Also, take advantage of special financing options like No Payments for 90 Days ($500 minimum order) that allow you to buy now and pay later. Check out Bill Me Later Secure Checkout for more details.