Restaurant equipment is one of the harder categories to finance and one of the most commonly financed anyway, because almost nobody opens or refits a kitchen out of cash flow. The difficulty is not the equipment — it is what lenders know about restaurants.
The general rules behind all of this — rate ranges, term lengths, and the documents a lender will want before it quotes — sit in our main equipment financing guide. This page covers what is specific to a kitchen.
This guide covers what gets financed, why kitchen equipment underwrites differently from most business assets, and when a lease beats a loan for this category specifically.
What gets financed
- Cooking line — ranges, ovens, fryers, griddles, char-broilers, salamanders, combi ovens.
- Refrigeration — walk-in coolers and freezers, reach-ins, prep tables, undercounter units, ice machines.
- Ventilation — hoods, make-up air, fire suppression. Often the single largest line in a build-out and frequently the one that triggers permitting.
- Warewashing — dishwashers, three-compartment sinks, disposals, water treatment.
- Front of house and systems — POS terminals, KDS screens, espresso equipment, bar systems, furniture in some structures.
- Smallwares — usually not financeable on their own. Rolled into a larger package or paid from working capital.
Why restaurant equipment underwrites differently
Two facts shape every quote you will get in this category.
- Used commercial kitchen equipment resells badly. A five-year-old range is worth a fraction of its new price, and much of a kitchen fit-out is effectively worthless the moment it is installed. Compare that with a dump truck or an excavator with a deep auction market, and you can see why the collateral argument is weaker here.
- Restaurants fail more often than most businesses. Lenders price accordingly. This is not a judgement on your concept; it is the base rate they are underwriting against.
- Installed equipment is harder to repossess. A hood welded into a ventilation run is not coming back out economically. Freestanding, moveable equipment tends to get better terms than built-in work.
The practical consequence: expect shorter terms, larger deposits and higher rates than the equipment financing averages, and expect your personal credit and time in business to carry more weight than the equipment itself.
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Kitchens are not the only equipment installed into a leased space and hard to repossess — commercial laundry equipment financing runs into the same constraint, and on that category the premises lease openly sets the term. If your deposit is the obstacle rather than the rate, no money down equipment financing covers what is actually available.
Typical terms
| Situation | Typical term | Typical deposit |
|---|---|---|
| Established restaurant, 2+ years, strong credit | 36–60 months | 0–10% |
| Established, thinner credit | 24–48 months | 10–20% |
| Second location for an operating group | 36–60 months | 10–15% |
| Startup / first location | 24–36 months | 20%+, often with a personal guarantee |
| Franchise with an approved concept | 36–60 months | 10–20% |
Put a quoted rate into our equipment loan calculator to see the monthly payment and the total cost before you commit to a term.
Lease or loan for a kitchen
This is one of the categories where leasing genuinely competes. Because kitchen equipment depreciates hard and some of it is replaced on a five-to-seven-year cycle anyway, not owning it at the end is less of a loss than it would be with yellow iron.
- Lease suits equipment you expect to replace or upgrade, tight opening budgets where the deposit matters more than the total cost, and operators who want payments treated as an operating expense.
- Loan suits equipment you will run until it dies — walk-ins, hoods, stainless fabrication — and anyone who wants the asset on the balance sheet.
- $1 buyout leases sit in between and are, in substance, financing. Read which one you are being offered; the tax treatment differs.
On tax: buying with a loan makes you the owner from day one and opens depreciation and potentially Section 179. For tax years beginning in 2025 the IRS caps that deduction at $2,500,000, reduced dollar for dollar once Section 179 property placed in service exceeds $4,000,000. The figures are indexed and change most years — check IRS Publication 946 and your accountant. Equipment financing vs leasing covers the full comparison.
Opening a first location
A startup restaurant financing a full kitchen is asking a lender to take a concept risk and a collateral risk at the same time. It gets done, but the structure usually involves a meaningful deposit, a personal guarantee, and a shorter term than an operating restaurant would get.
Three things materially improve the outcome: buying used or dealer-refurbished equipment where it is sensible to do so, which lowers the amount at risk; splitting the package so the moveable, resaleable equipment is financed separately from the built-in work; and having a signed lease on the space, because a lender will not fund a kitchen for a site you have not secured. Restaurant business loans covers the wider funding picture including build-out and working capital.
Bakeries sit in the same category with one important difference: production equipment is a far larger share of the bill, and ingredient cost volatility drives the underwriting in a way it does not for most restaurants. Bakery loans and equipment financing covers that case specifically, including why retail and wholesale bakeries are underwritten as different businesses.
When your equipment becomes part of the building
Hood systems, walk-in coolers and anything plumbed or hard-wired into a kitchen rarely come out cleanly. Once equipment is attached to real property it can legally become a fixture, and that changes who has the first claim on it if things go wrong. Under UCC § 9-334, a lender holding a purchase-money interest keeps priority over an existing mortgage holder only if it makes a fixture filing before the goods become fixtures, or within 20 days afterwards.
That 20-day window is the reason a lender asks who owns your building before it funds, and why a landlord or mortgagee waiver often appears on the checklist. If you lease your space, expect the request early. Chasing a signature from a landlord after the equipment is already installed is one of the most common reasons these deals close late.
Frequently asked questions
Forecourt food service is a growing category with its own constraint — on a fuel site the underground storage tanks, not the kitchen, decide whether a lender will touch the property at all. Gas station loans covers the environmental due diligence that drives those timelines.
Can I finance restaurant equipment with bad credit?
Yes, though the terms tighten considerably in this category because the collateral is weaker than in most equipment classes. No credit check equipment financing explains the trade-off.
Brewpubs straddle two categories, and the collateral is very different on each side. Stainless fermenters hold value and trade on an active secondary market; the kitchen next to them does not. Brewery and distillery equipment financing covers the production side, including how federal licensing gates the timeline.
Can I finance used kitchen equipment?
Yes, and for a startup it is often the smarter route. Lenders apply age limits and usually want a dealer invoice rather than a private sale. Used equipment financing covers the rules.
Does financing cover installation and permitting?
Installation on a dealer invoice can usually be included. Permitting fees, plumbing and electrical work done by separate contractors generally cannot, and are better funded from working capital or a line of credit.
How long does approval take?
Application-only approvals for established restaurants under roughly $150,000 are often same or next day. Larger packages and startups require full financials and take longer.
A worked example
An operator with three years trading and a 680 score refits a kitchen: combi oven, six-burner range, fryer bank, walk-in cooler and a new hood. Dealer invoice $96,000, with $14,400 (15%) down. Quoted 12.9% over 48 months.
- Amount financed: $81,600
- Monthly payment: $2,185
- Total interest: $23,284
- Total of payments: $104,884
Split that package and the numbers change. The hood and the walk-in — the built-in, hard-to-repossess portion — are the part lenders price most cautiously. Financing the moveable equipment separately, where the collateral argument is stronger, frequently produces a better blended rate than putting the whole fit-out on one agreement. Ask for it quoted both ways.
What to check before you sign
- Rate or factor rate. Fast-funding offers in this category often quote a factor rate. It is not an APR and cannot be compared to one without converting it first.
- Is it a lease or a $1 buyout? They are taxed differently and the total cost differs. Get it in writing.
- Personal guarantee scope. Nearly universal for restaurants. Check whether it is limited to the equipment or unlimited.
- What is filed against you. A blanket UCC filing across all business assets will restrict your ability to borrow elsewhere; a filing against the specific equipment will not.
- Insurance and loss payee. Required before funding. Price it before closing.
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