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Your Guide to Restaurant Equipment Financing

The price of opening and operating a restaurant is steep. Tight margins, high food costs and staffing take up a large portion of the budget, so finding the money to do anything else is tough. But when it comes to purchasing and updating your restaurant equipment, it’s a non-negotiable.

Luckily, there’s a solution: restaurant equipment financing.

Equipment financing is an excellent option for many restaurants, whether just starting or looking to update older appliances.

Restaurants typically use this type of financing to borrow hard assets for the business. (“Hard assets” is just a fancy term for tangible objects in your business that provide value and typically hold that value long term.) This applies to all your commercial kitchen equipment, from your walk-in refrigerator to your oven.

Instead of coming up with the entire cost of the equipment upfront, restaurant owners can finance it. Lenders will either pay for the equipment directly or give the money to the restaurant owners to use. Then, owners pay back the loan monthly with interest until its paid in full.

Since equipment financing relies on the equipment as collateral, loans are easier to come by and often come with better rates than traditional business loans.

What kind of equipment can you finance?

  • Commercial kitchen appliances
  • Large pieces of equipment
  • Smaller pieces of equipment (when bundled together)
  • Point-of-sale systems
  • Dining room furniture
  • Delivery vehicles

You also have the option of leasing kitchen equipment, although it’s much less common in the restaurant industry. When leasing restaurant equipment, the company you’re renting from owns the equipment while you use it. Since you don’t own the equipment, you don’t get any tax benefits associated with asset costs (more on that later).

Many leasing companies also offer lease-to-own (aka rent-to-own) options, where you purchase the equipment at market value when you reach the end of your lease agreement.

The Benefits of Financing Your Restaurant Equipment

Financing your restaurant equipment provides a lot of benefits over purchasing outright. Here are just a few of them.

  1. Keep cash on hand: Whether you’re opening a new restaurant or updating old equipment, financing allows you to keep more cash on hand while still getting you what you need. This is particularly important in the restaurant industry, where cash flow management is vital. You can keep money free for things like food inventory and payroll.

  2. Pay little upfront: Unlike bank loans (or paying in full), kitchen equipment financing requires little-to-no down payment. Since the equipment itself acts as collateral, there’s less risk for the lender and lower costs for you.

  3. Ensure top-quality equipment: Take your professional kitchen to the next level. By stretching out your payments, you’re able to afford better quality equipment than if you had to pay upfront.

  4. Keep equipment up to date: Stay ahead of your competition with the latest and greatest professional kitchen equipment available. In many cases, newer equipment will help improve your kitchen’s output, speed up throughput and maintain energy efficiency.

  5. Bring energy back into your business: Let’s be honest: when your staff has to work with old, outdated equipment, it takes a toll on morale. Your team may lack pride in their work or get frustrated with the accommodations they have to make for old equipment. Bringing new equipment in can reenergize your staff and bring new life back into your business.

  6. See low, fixed monthly payments: Since equipment financing comes with built-in collateral, you’ll likely see lower monthly payments than you would with loans. Plus, there are no surprises—you get a fixed rate for the length of your loan.

  7. Get better interest rates: Along the same lines as above, interest rates are reasonable compared to other types of business loans.

  8. Reap the tax benefits: Depending on the structure of your loan, you might be able to write off part (if not all) of your equipment purchases. This is specific to financing, as opposed to leasing, where you don’t technically own the product.

One important thing to note when financing your equipment is that it will cost you more in the long run than if you were to purchase the equipment outright. While this is certainly a con for equipment financing, the benefits far outweigh the costs for many. It’s vital to evaluate your situation to see which method is right for you.

Buying restaurant equipment?
Ovens, ranges, refrigerators, walk-ins, hoods, and more!

What to do Before Applying for Equipment Financing

  1. Identify the equipment you need to buy. It’s easier to secure a loan for multiple pieces of equipment than to try and secure new financing for piecemeal purchases.

  2. Select the vendor you’re going to buy your equipment from. Knowing exactly where you’re getting the equipment can speed the process along. Since some lenders will pay the vendors directly, they’ll need specific information before you see any lending terms.

  3. Figure out what you can afford. With this in mind, you can identify what lending terms make the most sense for your financial situation. This will help you select the right lender for your equipment financing, instead of the one that offers you the money first.

If you’re unsure of any of the above, this is where Avanti Restaurant Solutions can help. Our team provides full-service restaurant solutions, from picking out your equipment to helping you secure financing. 

Jump to our finance page for more information.

Can You Finance Restaurant Equipment with Bad Credit?

Because the equipment acts as collateral, it’s much easier for those with less-than-stellar credit to get financing with favorable terms. If you have extensive credit issues, then there are ways to work around it. A good lender will look at the bigger picture, including restaurant revenue, business credit and more.

Can Startups Finance Restaurant Equipment?

In short: yes! The same principles apply to equipment financing and leasing for startups as established restaurants. Some lenders require restaurants to have operated for a certain period of time, but not all.

If you’re looking to lease or finance restaurant equipment for your startup, look for startup-friendly lenders with less stringent requirements.

How to Apply for Restaurant Equipment Financing

If you’re ready to fund your new commercial kitchen equipment or redecorate your dining room, we’re here to help.

Financing your commercial restaurant equipment is as simple as one, two, three:

  1. Apply through our online form.
  2. Review and sign your documents securely online.
  3. Receive your funding.


Visit our financing page to learn more.

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