Why Restaurant Equipment Finance Makes Sense
Running a restaurant means you're constantly juggling costs, from ingredient supplies to wages, rent, and everything in between. When it comes time to purchase restaurant equipment - whether you're opening a new venue or upgrading existing equipment - the last thing you want to do is drain your working capital.
That's where commercial equipment finance comes in. Instead of paying tens of thousands of dollars upfront for commercial ovens, refrigeration units, food processing equipment, or other essential kitchen gear, you can spread the cost over time with fixed monthly repayments. This approach helps you manage cashflow while still getting access to the latest technology your kitchen needs.
For self-employed business owners, maintaining healthy cash reserves is crucial. Equipment finance lets you buy equipment without cash, keeping your funds available for unexpected expenses, marketing opportunities, or seasonal fluctuations that every hospitality business faces.
Understanding Your Finance Options
When you're looking to purchase restaurant equipment, you'll find several finance options available:
Chattel Mortgage
This popular option lets you own the equipment from day one while making regular repayments. The equipment serves as collateral for the loan, and repayments are typically tax deductible. At the end of the loan term, you own the equipment outright. Many self-employed restaurant owners prefer this structure because it's tax effective equipment financing.
Equipment Leasing
With equipment leasing, you essentially rent the equipment for a set period. You'll make payments throughout the life of the lease, and at the end, you might have the option to purchase the equipment, upgrade to newer models, or return it. This can be particularly useful for technology that becomes outdated quickly.
Hire Purchase
Similar to a chattel mortgage, hire purchase agreements let you use the equipment while making repayments. You'll own it once the final payment is made. This option provides a straightforward path to ownership with predictable monthly costs.
What Restaurant Equipment Can You Finance?
The scope of what you can finance is broader than many restaurant owners realise. Here's what typically qualifies:
- Commercial ovens, ranges, and cooking equipment
- Refrigeration units and cool rooms
- Food processing equipment like mixers, slicers, and processors
- Dishwashers and sanitation equipment
- Point-of-sale systems and computer equipment
- Furniture, including tables, chairs, and bar fittings
- Coffee machines and beverage equipment
- Work vehicles for deliveries
- Manufacturing equipment for commercial bakeries or food production
You can also finance broader business needs through related options. Many restaurants invest in office equipment for back-of-house operations, printing equipment finance for menus and marketing materials, or even solar equipment finance to reduce ongoing energy costs.
How Equipment Finance Works for Self-Employed Borrowers
As a self-employed person, you might wonder whether you'll qualify for commercial equipment finance. The reality is that lenders understand the hospitality industry and have finance options designed specifically for business owners like you.
When you access equipment finance options from banks and lenders across Australia, they'll typically assess:
- Your business financial statements and tax returns
- How long you've been operating
- Your business cash flow patterns
- The type and value of equipment you're purchasing
- The loan amount you're requesting
The equipment itself serves as collateral, which often makes approval more straightforward than unsecured lending. Whether you're buying new equipment for a startup or upgrading existing equipment in an established restaurant, lenders can structure repayments to suit your business cycle.
The Tax Advantages You Should Know
One of the significant benefits of equipment finance is the tax treatment. The interest rate portion of your repayments is typically tax deductible, and depending on the finance structure you choose, you may be able to claim depreciation on the equipment.
For plant and equipment finance, including kitchen equipment, you might also benefit from instant asset write-off provisions (subject to eligibility criteria and current tax legislation). This can provide substantial cash flow benefits in your first year of ownership. Always consult your accountant about how these tax effective equipment finance options apply to your specific situation.
Making Equipment Finance Work for Your Restaurant
Here's how to approach equipment finance strategically:
Match repayments to your cash flow
Look for cashflow friendly structures that align with your revenue patterns. Some lenders offer seasonal payment options if your business experiences quieter periods.
Consider the equipment's lifespan
Finance terms should make sense for how long you'll use the equipment. Financing a commercial oven over seven years is reasonable, but you wouldn't want the same term for rapidly evolving computer equipment.
Factor in business efficiency gains
New equipment often delivers productivity improvements that can offset your repayments. Faster cooking equipment, more efficient refrigeration, or automation equipment can reduce labour costs and energy consumption.
Don't just focus on the interest rate
While the interest rate matters, also consider the total package - flexibility, repayment terms, early exit options, and how well the structure matches your business needs.
Financing Beyond Kitchen Equipment
Restaurant owners often need more than just kitchen gear. You might need:
- IT equipment finance for reservation systems and business management software
- Vehicle finance for delivery vans or mobile food operations
- Industrial equipment leasing for larger production facilities
- Material handling equipment if you're running a commercial kitchen supplying multiple venues
Many of these fall under broader categories like asset finance, which covers everything from work vehicles to factory machinery. For restaurant owners expanding their operations, commercial loans might also be relevant for property purchases or major renovations.
Taking the Next Step
Purchasing restaurant equipment through finance isn't just about spreading costs - it's a strategic decision that helps you maintain working capital, improve business efficiency, and potentially access tax benefits. Whether you're opening your first venue or you're an established operator looking to upgrade technology, the right finance structure can make a real difference to your bottom line.
At Mortgage Path, we understand that self-employed business owners need flexible solutions tailored to their unique situations. We can help you explore various finance options and connect you with lenders who understand the hospitality industry.
Ready to discuss equipment finance for your restaurant? Call one of our team or book an appointment at a time that works for you. We'll help you find a solution that supports your business goals while keeping your cash flow healthy.
