Everything You Need to Know About Restaurant Equipment Finance

Starting or expanding a restaurant requires significant investment in commercial kitchen equipment, and the costs can quickly add up. From commercial ovens and refrigeration units to dishwashers and coffee machines, the equipment needed to run a successful food business represents a substantial financial commitment. Fortunately, equipment finance provides a practical solution that allows restaurant owners to access the tools they need without depleting their working capital.

Understanding Equipment Finance for Restaurant Equipment

Equipment finance is a specialised form of business lending that enables you to purchase essential restaurant equipment while spreading the cost over time. Rather than paying the full purchase price upfront, you can secure financing that covers the equipment cost and repay it through structured monthly payments.

This approach offers several advantages for restaurant owners:

• Preserve cash flow for daily operations
• Access modern, efficient equipment that might otherwise be unaffordable
• Potential tax benefits through depreciation
• Fixed monthly repayments that aid in budgeting

The equipment itself typically serves as collateral for the loan, which often results in more favourable interest rates compared to unsecured lending options.

Types of Equipment Finance Available

When applying for equipment finance for your restaurant, you'll encounter several loan options, each with distinct features:

Chattel Mortgage
With a chattel mortgage, you own the equipment from day one while the lender holds a security interest. This structure often provides tax advantages, as you can claim depreciation and interest as business expenses. Monthly repayments remain fixed throughout the loan term, helping you manage cashflow effectively.

Hire Purchase
Under a hire purchase arrangement, you gain immediate use of the equipment but don't own it until the final payment is made. The life of the lease typically ranges from one to seven years, with ownership transferring at the end. This option can work well for businesses that prefer lower initial outlay requirements.

Operating Lease
An operating lease allows you to use equipment for a set period without ownership responsibilities. At the end of the lease term, you can return the equipment, upgrade to newer models, or sometimes purchase at a predetermined residual value.

What Restaurant Equipment Can You Finance?

Commercial equipment finance covers virtually all types of restaurant equipment, including:

• Commercial cooking equipment (ovens, grills, fryers)
• Refrigeration systems and freezers
• Dishwashing equipment and warewashing systems
• Food preparation equipment (mixers, slicers, processors)
• Point-of-sale systems and office equipment
• Delivery vehicles and work vehicles
• Bar equipment and beverage systems
• HVAC systems and exhaust hoods

Whether you're buying new equipment for a startup restaurant or upgrading existing equipment in an established business, finance options are available to suit different business needs and circumstances.

The Application Process

Accessing equipment finance has become more straightforward, with many lenders offering a streamlined application process. Here's what you can typically expect:

1. Initial Assessment: Discuss your equipment needs and loan amount requirements
2. Documentation: Provide financial statements, equipment quotes, and business information
3. Credit Evaluation: Lenders assess your creditworthiness and business viability
4. Approval and Terms: Receive loan approval with specific interest rate and repayment terms
5. Settlement: Complete documentation and arrange equipment purchase

Most applications can be processed within a few business days, allowing you to move quickly when opportunities arise or when equipment replacement becomes urgent.

Factors Affecting Your Equipment Finance

Several factors influence the terms and interest rate you'll receive:

• Your credit history and business financial performance
• The type and age of equipment being financed
• The loan amount and repayment term selected
• Your industry experience and business plan
• The strength of your business cash flow

Lenders across Australia offer varying terms, so it's worth exploring multiple equipment finance options to find the most suitable arrangement for your circumstances.

Making Equipment Finance Work for Your Restaurant

Successful equipment financing requires careful planning. Consider these practical tips:

Budget Realistically: Factor equipment repayments into your business cash flow projections. Fixed monthly repayments help with budgeting, but ensure you can comfortably meet obligations even during quieter periods.

Choose the Right Term: Longer terms reduce monthly payments but increase total interest costs. Shorter terms cost more monthly but save money overall. Match the repayment term to the equipment's useful life and your business cash flow capacity.

Consider Future Needs: Think about whether leasing might suit your business better if you prefer regular equipment upgrades, or if ownership through chattel mortgage or hire purchase aligns better with your long-term strategy.

Maximising Your Equipment Investment

When financing restaurant equipment, focus on purchases that will generate the strongest return on investment. Energy-efficient equipment might cost more initially but can reduce operating expenses over time. Similarly, equipment that increases your capacity or improves food quality can directly impact revenue.

Many restaurants find that commercial equipment finance allows them to access higher-quality equipment than they could afford with cash purchases, leading to better reliability, lower maintenance costs, and improved customer satisfaction.

Access to equipment finance options from banks and lenders across Australia means you can compare terms and find arrangements that align with your business model. Whether you operate a small café, fast-food outlet, or fine-dining establishment, appropriate financing can help you acquire the tools needed for success.

Call one of our team or book an appointment at a time that works for you to discuss how equipment finance can support your restaurant's growth and operational needs.