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How To Finance New Restaurant Equipment

Written by Allison Martin

Allison Martin is a personal finance enthusiast and a passionate entrepreneur. With over a decade of experience, Allison has made a name for herself as a syndicated financial writer. Her articles are published in leading publications, like, Bankrate, The Wall Street Journal, MSN Money, and Investopedia. When she’s not busy creating content, Allison travels nationwide, sharing her knowledge and expertise in financial literacy and entrepreneurship through interactive workshops and programs. She also works as a Certified Financial Education Instructor (CFEI) dedicated to helping people from all walks of life achieve financial freedom and success.

Updated January 23, 2024​

4 min. read​

Whether you own a restaurant or want to break into the industry, one thing is certain. You’ll need reliable equipment to keep operations running smoothly.

Financing is the next best option unless you have the funds handy to purchase the equipment. There are several forms of financing to choose from, though, and understanding what each entails is vital to making the right investment for your company.

Read on to discover the most popular financing options for new restaurant equipment and how to secure the financing needed to move your business forward.

Is It Difficult to Get a Loan to Finance Restaurant Equipment?

Acquiring a loan to finance restaurant equipment can be challenging, but there are ways to simplify the process. Plus, various financing options are available, and many lenders are willing to work with borrowers to find suitable solutions for their needs.

When considering a loan for restaurant equipment, assess your financial situation and business requirements. Traditional banks can be more challenging to obtain financing from, as they typically require profitable businesses and stable financials. The process involved in securing a loan from a bank can also take longer, which may not be ideal if you’re looking to purchase equipment quickly.

However, alternative financing options are available for those needing restaurant equipment loans. Some lenders specialize in working with the food service industry and can provide restaurant equipment financing tailored to your needs. These lenders may have less stringent qualifications, making it easier to obtain the necessary funds.

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Types of Restaurant Equipment Financing

The two most common forms of restaurant equipment financing are leasing and loans.

Equipment Leasing

With this option, you enter into an agreement with a lender that allows you to temporarily use the equipment in exchange for regular lease payments. The duration of the lease can vary, but it usually lasts for a few years. One advantage of equipment leasing is that you don’t have to worry about the equipment becoming obsolete, as you can upgrade or replace it at the end of the lease. Furthermore, lease payments may be tax-deductible, providing an extra financial benefit.

Leasing might not be suitable for your business, though. If you plan to keep the equipment for an extended period, purchasing it outright in the long run may be more cost-effective.

Equipment Loans

Another option for financing restaurant equipment is through equipment loans. Equipment loans provide you with the funds needed to purchase the equipment outright, and you repay the loan, plus interest, in monthly installments over a set period. Business owners often prefer equipment loans when they have a long-term need for the equipment and want to build equity in the asset.

Equipment loans can be obtained through banks, credit unions or alternative lenders. To qualify for an equipment loan, you typically need a strong credit score, a stable financial history and a solid business plan.

The Benefits of Financing Restaurant Equipment

Here are some key benefits of financing restaurant equipment:

Requires Little to No Upfront Cash

Financing your restaurant equipment allows you to start operations without a significant upfront investment. This option also allows you to use the equipment immediately while spreading the cost over a more extended period.

Preserve Your Cash Flow

Cash flow management is essential in the restaurant industry; financing equipment can help you achieve that. Keeping cash on hand allows you to allocate funds for essential operational expenses like food inventory, payroll and rent.

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Potential Tax Deductions

Financing restaurant equipment may result in tax benefits since lease payments might be considered deductible business expenses. Of course, it’s always best to consult with an accountant or tax professional to ensure this applies to your situation.

Flexible and Low Payment Options

Many financing options for restaurant equipment offer flexible and low-payment options. Some lenders even provide customized payment plans to suit your specific needs. Choosing restaurant equipment financing with lower interest rates can decrease your overall borrowing costs, saving you money in the long run.

How To Finance New Restaurant Equipment

Below is a closer look at how to move forward with financing new restaurant equipment.

Traditional Business Loans

You can get a traditional business loan from a bank or financial institution to finance your restaurant equipment. To qualify for this type of loan, you must generally have a good business credit score and a solid business plan. The bank will review your financial records and ensure you can repay the loan on time.

Equipment Financing

Another popular option is equipment financing, which is specifically designed for purchasing equipment. The equipment itself serves as collateral, helping you secure better interest rates and loan terms. Equipment financing can provide you with the necessary funds quickly, allowing you to expand or upgrade your restaurant equipment as needed.

Manufacturer Financing

In some cases, equipment manufacturers may offer financing options directly to business owners. Manufacturer financing typically involves working with the equipment supplier to obtain a loan or lease for the equipment. This option can provide favorable terms and interest rates, as the manufacturer has a vested interest in seeing your restaurant succeed and continue purchasing more equipment from them.


Lease-to-own agreements allow you to use the restaurant equipment you need while making regular lease payments. At the end of the lease term, you may have the option to purchase the equipment outright, often at a discounted price. This method of financing can provide you with flexibility, as you can upgrade or replace the equipment as your business grows without having to make a significant upfront investment.

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Buy Now Pay Later

Some equipment providers may offer a “Buy Now Pay Later” option, allowing you to take possession of the equipment and start using it in your restaurant immediately with minimal upfront costs. You will likely be required to make regular payments (with interest) over a set period. This option may be useful if you need to acquire equipment quickly and lack the funds. However, be aware of the interest rates and payment terms to ensure they align with your budget and business plan.

Factors to Consider When Evaluating Financing Options

With a few attractive options to choose from, it can be challenging to determine which is best. But you can simplify the process by evaluating the following:

The Cost of the Equipment

When looking into financing options for restaurant equipment, you should consider the total cost of the equipment your business needs. This will help you determine how much financing you need to apply for. Remember that some lenders may offer better financing options for more expensive equipment.

Your Business’s Financial Health

Evaluating your business’s financial health before applying for financing is important. Lenders, especially banks and online lenders, will thoroughly review your financial records to ensure you can make the required payments. Ensure your credit score, cash flow and other financial components are in good standing to increase your chances of receiving favorable terms.

The Terms and Conditions of the Financing

Take the time to understand the terms and conditions of any financing agreement, as they can significantly impact the overall cost and repayment structure. Pay attention to the interest rates, loan terms, collateral requirements and penalties (if any).

The Lender’s Eligibility Requirements

Different lenders have different eligibility requirements. Traditional lenders, like banks, often have stricter requirements than online lenders. Typically, lenders impose time in business, annual revenue and credit score minimums.

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The Financing Provider’s Reputation

You can look at online reviews, consult with other business owners, or seek advice from industry associations. By choosing a reputable lender, you’ll likely have a smoother process and a more successful financing experience.

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