Restaurant Equipment Financing: Options, Rates & How to Apply
March 7, 2026 · 12 min read
$50K–$300K
Typical equipment cost for a new restaurant
Most independent restaurants need $100K-$175K in equipment alone. With the right financing, you can spread that cost over 5-10 years at rates as low as 5.5% APR.
Outfitting a commercial kitchen is one of the largest upfront costs of starting a restaurant. Ranges, walk-in coolers, ventilation hoods, POS systems, furniture — it adds up fast. This guide breaks down every financing option available, compares rates side by side, and helps you decide whether to lease or buy each piece of equipment.
6 Ways to Finance Restaurant Equipment
Not all financing is created equal. The right option depends on how much you need, how fast you need it, your credit profile, and whether you want to own or lease. Here are the main paths, ranked roughly from cheapest to most expensive.
Equipment Term Loans
Traditional bank or online lender loan secured by the equipment itself. Fixed monthly payments, and you own the equipment from day one. Most lenders finance up to 80-100% of equipment value.
Best for: High-value assets you plan to keep 5+ years (walk-ins, ranges, hoods)
SBA 7(a) Loan
Government-backed loan with lower rates and longer terms. The SBA approved over 77,000 loans through the 7(a) program in FY 2025. Requires more paperwork and takes 30-90 days to fund, but offers the lowest rates available.
Best for: Established restaurants with strong credit needing $50K+
SBA 504 Loan
Designed for major fixed assets. Only requires 10% down in most cases. The equipment must have a remaining useful life of at least 10 years. Best for buildouts where you're buying everything at once.
Best for: Large equipment packages ($100K+) with 10+ year useful life
Equipment Leasing
You don't own the equipment -- the leasing company does. Lower monthly payments and little to no money down. At the end of the lease, you can buy the equipment (often at fair market value), return it, or upgrade.
Best for: Technology that needs upgrading (POS systems, ice machines, dishwashers)
Vendor Financing
Many equipment manufacturers and restaurant supply companies offer their own financing, sometimes with promotional 0% APR periods. Convenient but compare rates -- dealer financing isn't always the best deal.
Best for: Buying directly from manufacturers or dealers (Hobart, Rational, True)
Business Line of Credit
Draw funds as needed, pay interest only on what you use. Good for replacing a single piece of equipment quickly, but rates are higher than secured equipment loans. Best kept as a backup, not your primary financing strategy.
Best for: Smaller purchases under $50K or emergency replacements
Revenue-Based Financing
Repayments come directly from daily card sales as a fixed percentage. Fast approval (often same-day) but the most expensive option. A factor rate of 1.3x means you repay $13,000 on a $10,000 advance.
Best for: Fast funding when you can't qualify for traditional loans
“The cheapest financing is always the loan you don't need. Before you finance, check whether leasing or buying used equipment gets you to the same result for less.”
Takeaway: For most independent restaurants opening their first location, a combination of an SBA loan for major equipment and vendor financing for the POS system covers 90% of needs. Read our guide to starting a restaurant for the full financial roadmap.
Equipment Costs by Category
Before you apply for financing, you need to know how much you actually need. These ranges represent 2025-2026 pricing for new, commercial-grade equipment. Used equipment typically runs 40-60% of new prices. For a full breakdown of all opening expenses, see our restaurant startup costs guide.
| Category | Budget | Mid-Range | Premium |
|---|---|---|---|
Cooking Equipment Commercial range alone runs $3K-$15K | $15,000 | $45,000 | $120,000 |
Refrigeration Walk-in cooler/freezer combo: $8K-$20K | $8,000 | $25,000 | $60,000 |
Dishwashing & Sanitation High-temp dishwasher: $4K-$12K | $3,000 | $10,000 | $25,000 |
POS & Technology Often leased due to frequent upgrades | $2,000 | $8,000 | $20,000 |
Furniture & Fixtures Fine dining: $300-$800 per seat | $5,000 | $20,000 | $60,000 |
Smallwares & Prep Commercial mixer (20qt): $1.5K-$5K | $3,000 | $8,000 | $20,000 |
| Total Equipment | $36,000 | $116,000 | $305,000 |
Budget Buildout
$36K-$75K
food truck / small counter-service
Mid-Range Buildout
$100K-$175K
typical casual dining (50-80 seats)
Premium Buildout
$200K-$400K
fine dining / full-service (100+ seats)
Warning: These numbers cover equipment only. Total buildout costs including construction, permits, deposits, and working capital typically run 2-3x the equipment budget alone. Plan your full business plan before committing to financing.
Interest Rate Comparison by Financing Type
The difference between a 7% and 18% APR on a $100,000 equipment package is over $35,000 in total interest over 5 years. Choosing the right financing type is one of the highest-leverage decisions you'll make.
| Financing Type | Min. Credit | APR Range | Term | Funding Speed |
|---|---|---|---|---|
| SBA 504 LoanBest rate | 680+ | 5.5-7.5% | 10-25 yr | 60-90 days |
| SBA 7(a) LoanBest rate | 680+ | 7.5-10.5% | Up to 10 yr | 30-90 days |
| Bank Equipment Loan | 700+ | 6-12% | 3-10 yr | 2-4 weeks |
| Online Lender | 600+ | 8-18% | 2-7 yr | 1-5 days |
| Equipment Lease | 620+ | 8-22% | 2-5 yr | 1-7 days |
| Vendor Financing | Varies | 0-24% | 1-5 yr | Same day |
| Revenue-Based | 550+ | 20-50%+ | 3-18 mo | Same day |
Cost Example
$100K at 8% for 5 years = $2,028/mo ($121,660 total)
$100K at 16% for 5 years = $2,432/mo ($145,900 total)
That 8-point spread costs you $24,240 more over the life of the loan. Always shop rates.
Takeaway: If you have a credit score above 680 and can wait 30-90 days for funding, SBA loans are almost always the best deal. Online lenders and revenue-based financing should be last resorts, not first choices.
Lease vs. Buy: When to Choose Each
This is the most common financing question restaurant owners face. The answer depends on three factors: how long you'll use the equipment, how fast it becomes obsolete, and how much cash you have on hand.
Buy (Loan)
Build equity in the asset
Claim Section 179 depreciation deduction (up to $1.16M in 2025)
No end-of-term surprises or buyout fees
Equipment serves as collateral for future borrowing
Lower total cost over the asset's full life
Higher upfront cost (10-25% down payment)
You're responsible for all maintenance and repairs
Risk of owning outdated technology
Ties up capital that could be used for operations
Lease
Little to no money down, preserves working capital
Lease payments are fully deductible as business expenses
Upgrade to newer equipment at end of term
Off-balance-sheet financing (operating leases)
Easier approval than traditional loans
No equity built -- payments don't add to ownership
Higher total cost over time than buying
Early termination fees can be steep
End-of-lease buyout at fair market value (not $1)
Can't use equipment as collateral
| Equipment | Recommendation | Why |
|---|---|---|
| Commercial range/oven | Buy | 15-20 year lifespan, holds value |
| Walk-in cooler/freezer | Buy | Permanent fixture, 10-15 year life |
| POS system | Lease | Technology updates every 3-5 years |
| Ice machine | Lease | Maintenance-heavy, frequent breakdowns |
| Dishwasher | Either | Buy if high-temp; lease if conveyor |
| Furniture & fixtures | Buy | Long life, no tech obsolescence |
| Ventilation hood | Buy | Permanent install, 20+ year life |
| Espresso machine | Lease | Complex maintenance, model turnover |
“Buy what stays, lease what changes. A commercial range from 2010 works fine today. A POS system from 2010 is a paperweight.”
Takeaway: Most restaurant owners should buy their core cooking and refrigeration equipment (65-70% of the package) and lease technology that updates frequently. Map out which category each item falls into in your kitchen layout plan before you apply for financing.
What Lenders Look For
Understanding the approval criteria before you apply saves time and prevents unnecessary credit inquiries. Here are the six factors every equipment lender evaluates.
Need a business plan to strengthen your application? Use our free restaurant business plan template
The Application Process, Step by Step
Whether you're applying for an SBA loan or an online equipment loan, the process follows the same general path. Here's what to expect.
Step 1: Check your credit and financials
Pull your personal and business credit reports. Most equipment lenders require a minimum personal credit score of 620-680. Calculate your debt service coverage ratio (DSCR) -- lenders want to see at least 1.25x, meaning your net operating income is 25% higher than your total debt payments.
Step 2: Gather your documents
Most lenders require: 2-3 years of business tax returns (or personal if startup), 3-6 months of bank statements, a current profit & loss statement, a balance sheet, a business plan (especially for new restaurants), equipment quotes from vendors, and your commercial lease agreement.
Step 3: Get quotes from multiple lenders
Apply to at least 3 lenders. Include your bank, an SBA-preferred lender, and one online lender for comparison. Multiple credit inquiries within a 14-day window count as a single pull for scoring purposes, so apply to all of them within the same two weeks.
Step 4: Submit your application
Complete the application with your strongest lender first. Be ready to answer questions about your restaurant concept, target market, projected revenue, and industry experience. Lenders want to know you understand the business, not just the food.
Step 5: Wait for underwriting
Online lenders: 1-5 business days. Bank loans: 2-4 weeks. SBA loans: 30-90 days. Use this time to finalize your equipment list and negotiate with vendors. Many vendors offer better pricing if you can show proof of approved financing.
Step 6: Close and fund
Review all terms carefully before signing. Check for prepayment penalties, late fees, and personal guarantee requirements. Once funded, the lender typically pays the vendor directly. Keep all receipts and warranties organized for tax purposes.
Takeaway: The application itself is the easy part. Preparation is everything. Restaurants with organized financials, a written business plan, and vendor quotes in hand get approved faster and at better rates.
Quick Reference Cheat Sheet
Bookmark this. Everything you need to know about restaurant equipment financing in one place.
Equipment Financing — Cheat Sheet
Best overall rate
SBA 504 (5.5-7.5% fixed)
10% down, 60-90 day funding
Best for startups
SBA 7(a) (7.5-10.5%)
15-25% down, need strong business plan
Fastest funding
Online lender (8-18%)
$0-20% down, 1-5 days
Best for technology
Equipment lease (8-22%)
$0 down, upgrade at end of term
Total equipment budget
$50K-$300K typical
Varies by concept and seat count
Min. credit score
680+ for best rates
Below 620 limits options severely
DSCR target
1.25x or higher
Net operating income / total debt service
Buy vs. lease rule
Buy what stays, lease what changes
Cooking equip = buy, POS = lease
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