What is equipment financing? How does it apply to restaurants?

Restaurants run on notoriously tight margins, and growing pains can flatten the upwards trajectory of even the most promising eatery. If you’re just starting up, looking to expand, or simply in need of a revamp, equipment financing may be for you.

Equipment financing is a way for small and medium businesses to buy equipment that acts as collateral for the loan, with the lender purchasing the items directly or giving you the capital to do so. It’s a great solution for anyone, including those with little business history or imperfect personal credit. By acting as its own collateral, the equipment secures the financing and lessens the risk to the lender, meaning longer repayment terms and lower interest rates.

Although this article focuses on financing, it’s worth briefly covering equipment leasing. With financing, you own the equipment, and with leasing, the lender owns the equipment while you use it, and you can usually opt to buy it at market value at the end of the lease. Equipment leasing tends to have even lower entry barriers than equipment financing (which, as we’ll see, is already fairly easy to get), and the short-term month-by-month costs are lower. Long-term, however, leasing tends to be much more expensive, and doesn’t come with any of the tax benefits covered below. Still, it’s one way to test out equipment before making the long-term commitment of financing.

Why finance equipment?

Simply put, it makes sense. Let’s see how.

Cashflow in the restaurant business and how financing frees up cash

Between recurring ingredient costs, staff salaries, and general overhead, the restaurateur needs superhuman budgeting skills to make a profit. Unless a convenient rich aunt writes you into her will, that new walk-in freezer or industrial dishwasher will probably remain a pipe dream. Financing creates new opportunities without breaking the bank, allowing you to up the quality of your establishment without sacrificing economic stability.

Loans come with interest, of course and this is no different, but while you save up for the upfront expense of equipment over the course of months or years, you’re missing out on income that could more than make up for the added costs associated with loans.

Access to top of the line equipment you otherwise can’t afford

We’re living in a foodie culture. After two years of on-and-off lockdowns, people are more desperate than ever for great culinary experiences, and establishments have to struggle to get back on their feet in a fiercely competitive environment.

Financing equipment lets you stay one step ahead of your peers by outfitting your kitchen with the newest tech. Not only will this likely cut down on prep time and energy costs, it gives your staff an edge and a sense of excitement about their work, while facilitating workflow (think more worktables, more efficient washers, better and larger mixers, etc.). Wins all around.

Low down payments

Equipment financing’s built-in collateral means little to no down payment, lower monthly payments with a fixed rate, and reasonable interest rates.

Tax benefits and write off opportunities

You may need to discuss this with your finance provider, but there’s a very good chance you can write off a sizeable chunk of your equipment purchase (with financing only, as leasing means you don’t own the product). Section 179 of the IRC allows restaurants that finance less than one million dollars in equipment to qualify for a deduction on that fiscal year’s net income for the first year of use. This can cut the true cost of the equipment by more than a quarter, depending on your bracket!

Types of equipment you can finance

Any hard asset qualifies, including:

Commercial kitchen appliances

Ranges, broilers, ovens, fryers, griddles, freezers. Most electrical kitchen devices fall under this category. Small equipment like knives or measuring spoons also qualifies provided it’s bundled into a larger purchase.

Point-of-sale systems

There’s charm to handwritten receipts, but a cutting-edge point-of-sale system makes your staff’s lives easier, lets you track orders and trends, and lowers the chances of human error.


Both kitchen and dining room furniture can be financed. Now that people can eat on the premises again, you might be tempted to give your place a makeover to really reel them in. And didn’t your chef say something about extra prep surfaces?

Delivery vehicles

By having your own drivers instead of relying on third-party services, you can eliminate the middleman. High-quality, efficient vehicles enable speedy deliveries, ensure the quality of the food stays high, reduce fuel and upkeep costs, and keep your staff safe.

How to apply for an equipment loan: identifying equipment, lenders, and determining what you can afford.

To apply for a loan, you need to decide what equipment you want to acquire. It’s important to strike a balance: too little might make it harder to secure the funds, but too much may make your monthly payments higher than you can afford. Be practical and realistic, but ambitious.

Once you know what you need, you can research the best terms for your situation. This includes identifying the vendor you plan on purchasing your equipment from, since having all the information available will help speed up the process.

With all the information and requirements in hand, you can discuss your needs and expectations with your lender in confidence. If everything goes well, you can be approved in a matter of days.

Conclusion: Describe solutions provided by CCF and include CTA/link to apply for equipment financing

Whether you know exactly what you want or still have questions, Capital City Funds has you covered. We have a team of industry specific experts ready to tailor funding to your business needs, with a wide range of experience and a diverse network of lenders.

If you need anywhere from $5,000 to over $2 million for your business, you can get a free quote on our website and be approved in as little as four hours. People all over the country are starting their own business or breathing new life into their existing enterprise, and we understand that everybody’s circumstances are different. Our rates are flexible and highly competitive, and we’re happy to work with startups, so make sure to drop us a line.