Restaurant Equipment Financing
Equipment financing funds commercial kitchen gear from $5,000 to $2 million, starting around 5.99% APR, with the equipment itself as collateral. Here is the part that catches owners off guard. Used restaurant equipment sells for pennies at auction, so the machine barely counts. Lenders underwrite your sales, your time in business, and your personal credit first, which makes this look far more like a revenue loan than the asset-based deal you would get on a truck. Match the money to the life of the gear, and keep the hood off your equipment loan.
Bottom line
Finance the gear you will run for years, and lease the gear that goes out of date. Equipment loans fund $5K to $2M from 5.99% APR with the machine as collateral, but because used kitchen equipment is nearly worthless at resale, lenders decide on your revenue and credit, not the hardware. Keep the hood and installation off the equipment loan, because those are leasehold improvements an equipment lender will not title. Never buy a 10-year walk-in with a 9-month cash advance.
What a commercial kitchen actually costs
A full commercial kitchen runs anywhere from $40,000 for a small cafe to well past $250,000 for a full-service line, and the single biggest swing is the hood. It is the most expensive line, the slowest to permit, and the one almost nobody budgets correctly. Below is where the money goes, and which lines equipment financing will touch.
Type I exhaust hood, make-up air, fire suppression, ductwork
$8,000 to $40,000+
Installed. This is a leasehold improvement bolted to the building, not titled equipment, so most equipment lenders will not fund it. Budget it as cash or roll it into a term loan. It is also the line owners under-budget most.
Walk-in cooler or freezer, box plus refrigeration
$8,000 to $25,000
The compressor is the part that fails and the part a used unit hides. New here usually pays for itself the first summer it does not quit.
Cooking line: ranges, ovens, fryers, griddle, broiler
$15,000 to $60,000
Heavy stainless with a 10-to-15-year life. This is the core of what equipment financing was built to fund, and where it works best.
Commercial dishwasher
$4,000 to $15,000
High-temp or chemical-sanitizing. A reasonable thing to lease, because the booster heater and pumps wear and you will want to swap it before it dies.
Reach-in refrigeration and prep tables
$5,000 to $20,000
Split life. The stainless tables outlast the restaurant. The refrigeration inside them does not.
POS system and install
$3,000 to $15,000
Obsoletes in three to five years. Lease this. Financing a point-of-sale system over seven years means paying for it long after you have replaced it.
Read that list once more and a pattern falls out. Roughly a third of a typical buildout is not financeable equipment at all. The hood, the ductwork, the fire suppression, the electrical, the plumbing: those are leasehold improvements attached to the building, and an equipment lender cannot repossess a duct run. On a $120,000 quote, maybe $90,000 is titled equipment and the rest is soft cost. Those two piles fund through different products, which is the whole reason the equipment financing vs term loan split matters before you ever pick a lender.
The equipment is the collateral, but your sales get you approved
Here is what most articles get wrong. They tell you equipment financing is easy because the machine secures the loan. For a restaurant, that is only half true, and the missing half is the one that decides your rate. Used commercial kitchen equipment is worth almost nothing the moment it leaves the showroom.
Walk a restaurant auction sometime. A six-burner range that cost $6,000 new sells for $800. A walk-in nobody wants to uninstall goes for scrap. Resale on used restaurant equipment runs roughly 10 to 30 cents on the dollar, and a lender knows it. So the collateral is a backstop, not the basis of the deal. They underwrite the thing that actually pays them back: your deposits.
This flips the usual advice. On a dump truck or a CNC machine that holds its value, the asset carries the loan and your credit matters less. On a fryer line, your restaurant and bar revenue carries the loan and the fryer is window dressing. Practically, that means three months of clean bank statements will do more for your approval than the shiniest quote in the building. A 650 FICO with steady daily deposits beats a 700 with a thin, lumpy account almost every time.
Finance, lease, or pay cash: match the money to the life of the gear
One rule settles most of this. Match the length of the financing to how long the equipment stays useful. A range lasts 15 years, so a five-year loan on it is cheap money. A POS system is dead in four, so a seven-year lease on it is a trap. Here are the three ways owners actually pay, and where each one fits.
Comparison current as of November 2026. Rates, lease structures, and lender policies change. Verify current terms before relying on any number below.
Equipment loan or $1-buyout lease
- Rate
- 5.99% to 25% APR
- Term
- 12 to 84 months
- End
- You own it. Title transfers, or you buy it for $1 at lease end.
Fits: The cooking line, the ovens, the walk-in, anything you will run for seven years or more. Fixed monthly payment, the gear as collateral, $0 down is realistic on a strong file, and the interest is deductible.
Fair market value lease
- Rate
- Lower monthly, higher total
- Term
- 24 to 60 months
- End
- You return it or buy it at market value at the end.
Fits: POS, kitchen display screens, anything that obsoletes fast. You trade ownership for a smaller payment and a clean upgrade path when the next version ships.
Merchant cash advance
- Rate
- 1.10 to 1.50 factor (40% to 150% effective APR)
- Term
- Daily or weekly holdback, 3 to 18 months
- End
- Nothing. It is a sale of future sales, not a purchase.
Fits: A short revenue gap at a restaurant that is already open and ringing sales. Never a 10-year asset. Paying off a walk-in over nine months out of daily deposits is how equipment purchases quietly close restaurants.
The finance-versus-lease call is really a question about obsolescence, not about the lowest monthly payment. A fair market value lease looks cheaper every month and costs more in the end, which is a fine trade for a POS you want to swap in three years and a terrible one for a range you will run until the restaurant closes. The equipment financing vs leasing breakdown runs the full cost math on both.
On the tax timing: equipment placed in service by December 31 can often be fully expensed that tax year under Section 179 and bonus depreciation, instead of depreciated over several years. The limits sit far above a typical kitchen, so your taxable income and the in-service date are the real constraints. Confirm the current-year figures with your CPA; the IRS Publication 946 is the primary source.
New versus used restaurant equipment
Used gear off a closed restaurant can cut your equipment budget in half, and sometimes that is the smart move. The trick is knowing which half of the kitchen to buy used and which half to buy new, because getting it wrong costs you more than you saved on day one.
Buy used on anything simple and mechanical that cannot hide a failure: stainless prep tables, shelving, dish racks, a solid range you can light and inspect, sometimes a hood if the CFM rating fits your line. That stuff is honest. What you see is what you get, and a $6,000 range at $1,500 is a real saving on a machine with a 15-year life.
Buy new on anything with a compressor or a computer. A used walk-in hides a tired compressor that dies in August, during your busiest service, with food inside it. Used refrigeration and used ice machines are where owners chase a bargain into a repair bill that erases it. One more thing most buyers miss: financing terms on used equipment run shorter and price higher, because the lender knows the collateral is even thinner than usual. A $30,000 used package might only stretch to 36 months where new would go 60, so the monthly payment gap is narrower than the sticker suggests.
What $120,000 of kitchen costs, three ways to pay
Same $120,000 package, three structures, one restaurant doing about $18,000 a month in owner cash flow. Watch what each path does to that number. Illustrative figures on generic numbers. Run yours.
Path A — Equipment loan, $120,000 at 8.99% over 60 months
Monthly payment about $2,489. Total paid across five years runs roughly $149,300, so the cost of the money is near $29,300. The gear collateralizes itself, $0 down is realistic on a clean file, and the interest is deductible. Against $18,000 of cash flow, the payment is comfortable, which is the entire point of matching a five-year loan to a 10-year asset.
Path B — Fair market value lease
Lower monthly, often by $300 to $500, in exchange for owning nothing at the end. A fine structure for the fast-aging slice of the kitchen, the POS and the screens. A poor one for the cooking line, where you give up ownership of a machine you were going to keep for a decade. Lease the parts that obsolete. Finance the parts that last. Most owners end up doing both on the same kitchen, and that is the right answer, not a compromise.
Path C — $120,000 merchant cash advance at a 1.35 factor
Total repayment $162,000. Over a nine-month holdback that is about $18,000 a month, or roughly $831 every business day, pulled straight out of your deposits starting the week the equipment arrives. Set that against $18,000 of monthly cash flow and the restaurant nets zero while it pays. You bought a machine that lasts a decade with money that has to be gone in nine months. The math does not work, and it is not supposed to. An advance is a tool for a short revenue gap at an open restaurant, not a way to buy a walk-in.
Pick: finance the long-life line on Path A, lease the POS and screens on Path B, and keep the hood and install on a separate term loan or cash. Path C is not a more expensive version of the same purchase. It is a different outcome, and the outcome is bad. If you are weighing the structure against opening a whole second kitchen, the second-location financing guide runs the same discipline across a full expansion.
What to have ready before you apply
Five things decide how fast and how cheap this goes. The shorter your list of missing documents, the sooner the walk-in is running and the better your rate. One of these does more work than the other four, and it is the itemized quote.
Three to six months of business bank statements
The first thing anyone reads. Average daily balance, NSF hits, and whether an advance is already debiting you. Two NSFs in ninety days will move your pricing more than fifty points of FICO.
An itemized vendor quote, split by machine
Not a lump sum. Equipment lenders title specific units, so a quote listing each piece, model, and serial funds in days. A single 'kitchen buildout' number gets kicked to a slower term-loan desk.
The hood and installation costs, called out separately
Ductwork, fire suppression, electrical, and plumbing are leasehold improvements. Knowing that number up front keeps the soft costs from blowing up an equipment approval at the last minute.
Personal FICO and a personal guarantee
Restaurant equipment is weak collateral, so the lender leans on you. Under about 600 narrows the field. At 650-plus the better rates and the $0-down structures open up.
Time in business and monthly revenue
Six months open and roughly $8,000 to $10,000 a month gets you in the door. The machine secures the loan on paper. Your deposits are what actually get it approved.
A quick word on a cafe or a small concept. If you are opening a coffee bar rather than a full line, your equipment list is shorter and your hood may be smaller or gone entirely, which changes the whole budget. The coffee shop financing guide and the broader equipment financing guide both go deeper on the smaller-ticket version of this decision.
Price the kitchen before you sign the vendor contract
A 2-minute application puts your file in front of lenders who fund restaurant equipment across loans, leases, and term structures. Soft credit pull, no obligation to take anything that comes back.
Frequently asked questions
Can I finance restaurant equipment with bad credit?
To a point, yes. Equipment financing is one of the more forgiving products because the gear is collateral, so approvals happen at 600 and sometimes below, especially with a down payment or strong deposits. Below 600, expect a higher factor, a shorter term, or 10% to 20% down. What moves the decision more than the score is your bank statements. Steady daily deposits and no recent NSFs carry a 590 file further than a clean 680 with thin revenue.
Should I lease or finance restaurant equipment?
Match the contract to how long the machine stays useful. Finance, or take a $1-buyout lease, on anything you will run seven years or more: ranges, ovens, the cooking line, heavy stainless. Lease anything that obsoletes or wears fast, like a POS or kitchen display screens. The classic mistake is financing a point-of-sale system over seven years, because you will replace it in four and keep paying for the old one.
Is the equipment itself enough collateral to get approved?
Usually not on its own. Used commercial kitchen equipment sells for roughly 10 to 30 cents on the dollar at auction, so lenders treat the machine as a backstop, not the basis of the decision. They underwrite your revenue, your months in business, and your personal credit first. That is why restaurant equipment financing reads more like a revenue loan than the asset-based lending you would see on a truck or a CNC machine that holds its value.
Does equipment financing cover installation and the hood?
Often no. An equipment lender titles specific, removable assets. A Type I hood, its ductwork, fire suppression, and the electrical and plumbing to tie it in are leasehold improvements attached to a building you may not own. Those soft costs usually fund through a term loan or cash. Ask before you sign, because a $120,000 quote that is really $95,000 of equipment and $25,000 of installation gets financed two different ways.
Can I write off restaurant equipment the year I buy it?
Frequently, yes. Equipment placed in service by December 31 can often be fully expensed that tax year under Section 179 and bonus depreciation, rather than depreciated over several years. The dollar limits sit far above a typical kitchen package, so the real constraints are your taxable income and when the gear is actually running. Confirm the current-year numbers with your CPA. The IRS Section 179 overview is the primary source.
How fast can restaurant equipment be funded?
Equipment financing is among the fastest business funding there is. A clean file with an itemized vendor quote funds in one to three business days, sometimes same day on a smaller ticket. The speed comes from what the lender skips: many equipment lenders want bank statements and the quote, not two years of tax returns. That one difference is most of why equipment paper funds in days while an SBA loan takes weeks.
Funding more than a kitchen? The restaurant and bar funding page covers working capital, payroll float, and the slow seasons that equipment financing does not reach.
Quick Loans Direct is a lending marketplace, not a direct lender. Actual rates, terms, and approval decisions are made by our lending partners based on their individual underwriting criteria and vary by borrower, business profile, and product. Rates and disclosures may vary by state. California, New York, Virginia, Utah, Georgia, Connecticut, Florida, Kansas, and several other states require specific commercial financing disclosures that your chosen lender will provide.
Every dollar figure on this page is illustrative arithmetic on generic figures, shown so you can re-run it with your own numbers. Equipment prices, lease structures, and lender pricing vary widely by market, concept, and vendor. Payment figures are standard amortization calculations and exclude documentation fees, down payments, and tax, all of which change the real cost of capital. Tax treatment depends on your situation and the current-year rules.
This content is for informational purposes only and does not constitute financial, tax, or legal advice. Consult a qualified professional before making business financing or tax decisions. Last reviewed by the Quick Loans Direct editorial team on November 2026.