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DEMO: Sponsored Article “Who’s In the Money”

Cafe owners struggling to get a business or personal loan from their banks may also have an alternative source of finance.

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The cafe experience

When you’re starting out in a business from scratch, you don’t have a real idea of how much it will all cost you,” says George Sabados franchise consultant. “Unforeseen council requirements can end up costing you a lot more than you anticipate.”

Freeing up working capital in anticipation of these ‘hidden costs’, is one successful measure against business failure. Financing equipment can be easier if finance deals are structured around leasing of equipment. It means capital is not tied up in equipment and thus able to free capital to satisfy unforeseen council requirements that came along later.

Zenith finance (www.zenithfinance.com.au) an Australian company provides loan and finance products targeting the hospitality sector. Managing director Richard Korda says that the sector has been poorly handled by the traditional banks and finance companies. “There is a lack of understanding by restaurant and cafe operators of what finance is available.”

The lending houses attract strong interest from small businesses and individuals, who use the short-term loans to fund tax bills, employee salaries or holidays.

Choices about for the savvy business owner when it comes to finance; you do need to look at the options available.

One of the most popular forms of business equipment finance is commercial hire purchase which is a finance loan where you hire business equipment, a car, truck or other vehicle for a fixed monthly repayment over an agreed period. It’s also called a term purchase, offer to hire, hire purchase, asset purchase, CHP or HP.

The process of financing here is that the finance broker, such as Zenith Finance, purchases the equipment or vehicle on your behalf. Then we hire it out to you over a contracted time frame. During this period, we still own the vehicle or equipment. When your contract term is finished and you’ve paid in full, you own the equipment or vehicle.

Richard Korda explains: “In a finance lease we issue rental agreement where we purchase the business equipment or vehicle for you. Then you rent it from us at fixed monthly repayment over an agreed period. You might have also heard it called a lease or equipment lease.

The benefits of this finance class include lower interest rates as the equipment is secured by mortgage; less risk because you don’t fork out a huge payment to buy the equipment; short or long term contracts – from 1 to 5 years.

Note however that leasing is a different concept to renting because leasing offers less flexibility and requires a longer minimum term. Unlike renting, equipment that you lease sits on your balance sheet and may affect your equity ratio, which is a part of what the bank looks at when it considers you for a loan.

For more information see www.zenithfinance.com.au