Start up Loan or Equipment Finance?

[Bakingmad]

Hello All

I’m looking for advice on what would be more preferable- equipment financing or taking out a startup loan to buy my equipment. I’ll be scaling up my micro bakery to a more prominent b+m location and will be putting in around £70-£75,000 . Realistically (and from what I’ve budgeted) everything from rent deposit, stamp duty, equipment, fit out, working capital etc is likely to cost around £100,000 so I’m looking for a way to fill that shortfall. Does anyone here have experience/advice/recommendations about startup loans or equipment financing particularly in the hospitality industry? Are there limits to what or who can be financed? upfront costs? which would be the more affordable option? I'm technically a new business and I don't have much assets (house or car etc) just my existing rather old equipment. I'm based in London if that's any help!

Thank you

 

[Chris Ashdown]

Another route could be leasing the more expensive equipment of second hand equipment as normally lots of good quality catering equipment on the second hand market

 

[WaveJumper]

Forum member @Mark T Jones maybe the person for advice on this one

 

[Bakingmad]

Another route could be leasing the more expensive equipment of second hand equipment as normally lots of good quality catering equipment on the second hand market

I didnt realise secondhand equipment could be leased, thank you for this suggestion

 

[Mark T Jones]

Many thanks @WaveJumper

@Bakingmad I am indeed the person to ask, since my specialism is funding fit outs of commercial premises and I am an advisor for Start Up Loans via Transmit.

As ever, there are many layers to your question, and the answer will be 'it depends'.

In many cases, the optimum solution is to mix facilities, using SUL for soft costs and HP/leasing for equipment (yes, you can finance used equipment as long as the title chain is clear).

I will throw in here that the finance option will be hampered by lack of home-owning guarantor (or at least a guarantor of some substance)

In any case, I'm happy to address general questions on here and specifics if you want to contact me directly.

 

[Bakingmad]

Many thanks @WaveJumper

@Bakingmad I am indeed the person to ask, since my specialism is funding fit outs of commercial premises and I am an advisor for Start Up Loans via Transmit.

As ever, there are many layers to your question, and the answer will be 'it depends'.

In many cases, the optimum solution is to mix facilities, using SUL for soft costs and HP/leasing for equipment (yes, you can finance used equipment as long as the title chain is clear).

I will throw in here that the finance option will be hampered by lack of home-owning guarantor (or at least a guarantor of some substance)

In any case, I'm happy to address general questions on here and specifics if you want to contact me directly.

Thank you for answering Mark. Yes it really is a rather broad question! I thought I might have to provide a guarantee of some sort..I'm not opposed to this as I have faith the business will perform well I'm just very aware I have no security to charge the personal guarantee over. Knowing that secondhand equipment can be financed does ease my mind a bit as I do know a reputable equipment supplier.

How does hire purchase work exactly? Do I submit documents/business plans+projections etc detailing what and where I want to purchase and the broker then makes the payment?

 

[Mark T Jones]

Thank you for answering Mark. Yes it really is a rather broad question! I thought I might have to provide a guarantee of some sort..I'm not opposed to this as I have faith the business will perform well I'm just very aware I have no security to charge the personal guarantee over. Knowing that secondhand equipment can be financed does ease my mind a bit as I do know a reputable equipment supplier.

How does hire purchase work exactly? Do I submit documents/business plans+projections etc detailing what and where I want to purchase and the broker then makes the payment?

Hire purchase or lease (the samein terms of process)

You provide information we/the broker finds lender willing to lend - Usually, supplier invoices the lender who pays them.

There may be flexibility if it's beneficial for you to pay directly, but you need to check this first.

 

[Bakingmad]

Hire purchase or lease (the samein terms of process)

You provide information we/the broker finds lender willing to lend - Usually, supplier invoices the lender who pays them.

There may be flexibility if it's beneficial for you to pay directly, but you need to check this first.

Thanks for explaining! Are those your details under your post? May I contact you in the coming weeks?

 

[Mark T Jones]

Thanks for explaining! Are those your details under your post? May I contact you in the coming weeks?

Please do

Just follow the email on the website

 

[Bakingmad]

Please do

Just follow the email on the website

Much appreciated!

 

[Chris Ashdown]

I didnt realise secondhand equipment could be leased, thank you for this suggestion

Sorry That was meant to be or Rather than of, I did not know that you could lease second hand equipment so just meant to suggest using them as far cheaper than buying new

Have a look at https://www.caterquip.co.uk/