Equipment Finance for Restaurants: What You Need to Know

Restaurant equipment represents one of the largest capital outlays for food service businesses.

Whether you're opening your first cafe or expanding an existing venue, the cost of commercial ovens, refrigeration systems, and food processing equipment can reach $50,000 to $150,000 before you serve a single customer. Equipment finance allows you to acquire what you need while preserving cash reserves for inventory, staffing, and the inevitable surprises that come with hospitality.

How Commercial Equipment Finance Works for Restaurant Owners

Commercial equipment finance provides funding specifically for business assets like kitchen equipment, point-of-sale systems, and furniture. Rather than paying upfront, you make fixed monthly repayments over an agreed term, typically between two and seven years depending on the equipment's expected lifespan.

The equipment itself usually serves as collateral for the loan, which means lenders can offer more accessible approval criteria than unsecured business lending. Consider a family opening a bakery in Coorparoo who need $80,000 for commercial ovens, mixers, and refrigeration. Through a chattel mortgage structure, they can claim GST credits on the purchase price and claim depreciation as a tax deduction, while spreading repayments over five years to align with the equipment's productive life.

Chattel Mortgage vs Equipment Leasing: Which Structure Suits Hospitality

A chattel mortgage means you own the equipment from day one and use it as security for the finance. You claim the full GST credit upfront, depreciate the asset, and deduct interest payments. At the end of the term, there's no residual payment because you already own what you financed.

Equipment leasing means the financier owns the equipment during the lease term and you make regular payments for its use. At the life of the lease, you typically have options to purchase the equipment, upgrade to newer models, or return it. Leasing can offer lower initial repayments but may result in higher total costs depending on the residual value.

For restaurant owners who want to own their core kitchen equipment outright and maximise tax benefits, chattel mortgage arrangements typically deliver better value. For technology that becomes obsolete quickly, such as IT equipment or point-of-sale systems, leasing may provide more flexibility to upgrade without being locked into outdated assets.

What Equipment Qualifies and How Much You Can Finance

Most commercial equipment used to generate business income qualifies for finance. In hospitality, this includes commercial-grade cooking equipment, refrigeration and freezer units, dishwashers, extraction systems, coffee machines, food processing equipment, furniture, and fit-out costs.

The loan amount depends on the equipment's value and your business's capacity to service repayments. Lenders typically finance 80% to 100% of the equipment cost, with some allowing additional funds for installation and delivery. For established restaurants, financing up to $500,000 in equipment isn't uncommon when undertaking major renovations or opening additional locations.

As an example, a Vietnamese restaurant in Springwood upgrading to commercial wok burners, refrigeration, and ventilation might finance $95,000 over four years. With monthly repayments around $2,200 depending on rates and structure, the business can manage cashflow while installing equipment that increases kitchen capacity and allows them to expand their menu.

Tax Benefits That Make Equipment Finance More Affordable

Equipment purchased for business purposes is generally tax deductible through depreciation claims, and the interest on finance is also deductible as a business expense. This makes the effective cost of financing lower than the nominal interest rate suggests.

Under instant asset write-off provisions that have applied in recent periods, eligible businesses may be able to immediately deduct the full cost of equipment rather than depreciating it over several years. These provisions have specific eligibility criteria around business turnover and asset values, and they change periodically, so it's worth confirming current thresholds with your accountant before committing to a purchase.

For a family running a suburban cafe, the combination of GST credits, depreciation, and interest deductions can reduce the after-tax cost of a $60,000 equipment package by $15,000 to $20,000 over the finance term, making new equipment substantially more affordable than upfront purchase prices suggest.

How Lenders Assess Restaurant Equipment Finance Applications

Lenders evaluate your application based on your business's financial position, trading history, and ability to service repayments. For established restaurants, they'll review recent financials, bank statements showing trading activity, and sometimes your business tax returns.

For new ventures, lenders place more weight on the directors' personal financial position, industry experience, and the business plan demonstrating how the equipment will generate revenue. A deposit of 10% to 20% may be required if the business has limited trading history.

Processing times vary, but once documentation is submitted, approval for straightforward equipment finance can occur within 48 to 72 hours. More complex applications involving new businesses or larger amounts may take a week or more as lenders conduct additional due diligence.

Preserving Working Capital While Upgrading Equipment

Restaurants operate on tight margins where cash reserves matter. Tying up $100,000 in kitchen equipment leaves less available for stock, wages, and covering slower trading periods.

Financing allows you to buy equipment without depleting cash reserves, which proves particularly valuable when you're also managing fit-out costs, initial inventory, and marketing for a new venue. Monthly repayments become a predictable operating expense that you can budget around, rather than a capital drawdown that reduces your buffer against revenue fluctuations.

For families entering hospitality, this cashflow benefit often determines whether opening a restaurant is financially viable. The ability to spread equipment costs over several years while using operating revenue to cover repayments makes the transition from planning to trading more manageable, especially when you're also juggling mortgage repayments and household expenses.

Getting Started with Restaurant Equipment Finance

Once you've identified the equipment you need and received supplier quotes, the process involves completing a finance application, providing recent business financials or projections for new ventures, and submitting identification and business registration documents.

Working with a broker who understands commercial loans and has access to multiple lenders means you're not limited to a single approval option. Different lenders have different appetites for hospitality lending and varying criteria around deposits, trading history, and credit quality. A broker can match your specific situation with the lenders most likely to approve your application on favourable terms.

Call one of our team or book an appointment at a time that works for you to discuss how equipment finance can help you acquire the restaurant equipment you need without compromising your working capital position.

Frequently Asked Questions