Leasing Equipment

[Horsepoorx2]

Does anyone know of anyone who leases brewing systems, or anyone who has leased equipment? It is always wise to minimize your capital expenditures. This seems like a good way to do it, but I have not seen or heard of any references to the practice.

[Butcher Scott]

www.breweryfinance.com

[Bham Brewer]

A buddy of mine was the brewmaster at a company that leased it's brewing equipment. They lost their shirts. There were other issues going against them it's true, but he told me that their equipment lease was killing them monthly. In my opinion the best bet for a new brewery is to buy quality used equipment from a reputable service like NABS, Ager Tank or one of the others.

[Neckbone]

I've thought about the leasing equipment as well. I'm also against leasing the brewhouse and most things. I think that's a place that you need to invest your capital. I am looking at leasing kegs. Those seem to me to be a place that a lease would be effective.

[Horsepoorx2]

Thank you, folks, for your replies. It sounds like if I am thinking about leasing, I had better think carefully about it. I have also heard that being careful about used equipment is also a necessity. I have inquired about a used 7 bbl system that I saw on this site, but I have not heard back from the company yet. I have some time to shop around. I do not anticipate opening for another two years. It will take me that long to complete my education and put things in place. It's a lot of work, but a ton of fun!

[tsewong73]

I really suggest talking to a banker or your loan officer (one in the same?). I was considering a rent-to-own deal for my fork lift and my banker explained that you're better off getting financing in those situations if you can't buy it outright. In a four-year rental agreement, for instance, versus a four-year term loan, the rental fee is usually higher than the interest payments, and at the end you usually still have to cough up a wad of cash because the rental payments only pay off a certain percentage of the total principle.

Now, I realize that's not quite the same as a regular lease, but the cash-hemorrage is about the same. Consider also, in a worst case scenario, if you signed a lease for, say, six years and your brewery fails in four, then you might either still be responsible for paying monthly rental payments or they'll kill you with a cancellation fee and/or hit you with a one-year's notice clause - or something like that.

At any rate, I really suggest talking to a banker. Of course, he's got an interest in landing a new loan for his bank, but I think he'll also be honest with you and explain the whole thing. If you do sign a lease, make sure your lawyer goes over it thoroughly.