Restaurant Equipment Financing: The Best Lending Options & Everything You Need To Know 

Camino Financial16 Nov 2023
Restaurant Equipment Financing: The Best Lending Options & Everything You Need To Know 
Restaurant equipment financing is crucial for starting or expanding a food business. As a restaurant owner, investing in high-quality machinery is essential to ensure smooth operation and customer satisfaction, but maybe you don't have the financial resources to buy everything upfront. By accessing external funds, you can get the necessary equipment without breaking the bank. This article explores five options for making an informed decision and maximizing your investment.

Best Products To Finance Restaurant Equipment

Commercial Equipment Loans

Equipment financing loans are products specifically for buying machinery and equipment. They typically provide businesses with up to 100% coverage on new or used machinery at competitive rates. With these types of loans, the equipment you're buying is the collateral that guarantees the loan. They usually require a down payment. Many lenders offer flexible payment plans that allow borrowers to tailor their payments according to their budget and projected revenue streams. When applying for a restaurant equipment loan, it's essential to consider the following:
  • Have a business plan. You will need to provide a solid business plan detailing a list of necessary equipment, the cost of the equipment, and how you'll pay back the loan.
  • A good credit rating will make lenders trust you to repay.
  • Prove the business's potential. You must provide proof of your restaurant's profitability and financial stability.

Traditional Loans

Banks and credit unions often offer loans with lower interest rates than other lenders, making them an attractive option for those who may not qualify for more specialized financing. Here's what you will need:
  • A business plan. Again, you will need a well-developed business plan that outlines your restaurant's concept, financials, and operations. You'll also need to show the bank or credit union that you can manage the loan responsibly.
  • Have an excellent credit rating. You must provide the lender with an excellent personal credit score, collateral, and a solid personal financial history.
  • Business information. You must provide information about the proposed restaurant, such as the location, menu, and projected sales. This will allow the lender to assess the potential for success.

Alternative Loans

You may also be able to acquire loans from alternative sources, such as online lenders. Many of these options offer competitive rates and quick access to capital. Many applicants prefer alternative loans because they are more straightforward and often have fewer restrictions than traditional loans. Some of the most common requirements are:
  • Have a business plan. You must have a detailed business plan that outlines the project's budget, financial projections, and repayment strategy. At Camino Financial, we don't ask you to show us a business plan,
  • Business and financial information. Online lenders usually require two to three years of tax returns, financial statements, and bank statements. At Camino Financial, you can digitally send all your documents and information anytime, anywhere.
  • Have a good credit rating. You must have a minimum credit score to qualify for loans from most online lenders. At Camino Financial, you can apply with a 580 score.
Again, it's important to note that your options depend on your situation. Before making any decisions, compare rates and read the loan terms carefully. If you need help financing restaurant equipment, Camino Financial is here to help. We offer restaurant loans with competitive interest rates and flexible repayment plans tailored specifically for small business owners.

Get started today by applying for a small business equipment loan with us!

Apply For A Business Loan!

SBA Loans

The U.S. Small Business Administration offers loans to help small businesses access capital, typically through banks or other lenders. The SBA also approves and guarantees these loans. Terms and interest rates vary depending on the lender and the size and purpose of the loan. Generally, most entrepreneurs use SBA loans for start-up costs, expansions, equipment purchases, or working capital. For a restaurant business, you can either access an SBA 7(a), SBA 504, or an SBA Express Loan. Here is what you will need:
  • Reasonable equity to invest. Your business must be profitable. You can also offer other equity as collateral.
  • Legal requirements. The proprietor must not be on parole, and the venture must be from the United States or one of its territories. Also, make sure all the necessary paperwork is in order.
  • Excellent credit score. Demonstrate an excellent personal credit history to lenders. A credit rating of 670 is ideal.
  • Financial statements. Show your current financial position and cash flow for the restaurant business. Most lenders will also ask you to pursue alternative financing before applying for an SBA loan.

Merchant Cash Advances

The products offer a lump sum upfront based on your sales. You must repay them gradually by giving the lender a percentage of your credit card sales. It is essential to notice that they have very high fees and interest rates. Some factors and requirements to consider:
  • Meet the minimum criteria. For example, some lenders require your restaurant business to have operated for at least six months and racked up a minimum sales volume of $5,000. However, this depends on individual lenders, so it is vital to consider each separately.
  • Banking information. Your business should have a valid business bank account.
  • Have the necessary documents. You should be ready to produce a valid business license, a valid form of identification, a valid credit card processing statement, and financial statements or tax returns. In most instances, you also must have an active business phone number.

How To Choose A Restaurant Equipment Financing Option

When selecting the best option for the restaurant industry, it is vital to take the following steps:
  1. Understand your cash flow to help you determine what financing is logical for your business.
  2. Research all available options by considering loan terms, fees, and repayment plans to choose an option that fits your budget and timeline.
  3. Compare lenders' terms and conditions and read reviews from past customers.
  4. Consider any additional features you might benefit from by partnering with a particular financier, such as access to repair services or warranties on purchases made through them.

Tips To Compare Loans And Lenders

Here are some tips on how to choose the right option for you:
  • Identify your needs. Know your specific needs and goals. For example, are you looking for short-term or long-term financing? How much money do you need? What types of equipment purchases are necessary?
  • Compare rates and terms. Look at interest rates offered by traditional and online lenders to know exactly what terms each offer.
  • Check credit requirements. Different lenders may require different credit scores to qualify for their loans or lines of credit. This means that even if two lenders have similar rates and terms, they may not both accept the same applicants.
  • Consider collateral. Make sure that whatever collateral is being used has enough equity to cover the amount requested from the lender in case something goes wrong with repayment plans later on down the road.

How To Apply For A Restaurant Equipment Loan

Applying for restaurant equipment financing can be simple if you have the right tools. You can take the following steps:
  1. Collect all the necessary documents, such as income statements, tax returns, collateral, and references from other businesses in the same field.
  2. Check your credit score. This will help you determine the type of financing that best suits your needs and budget.
  3. Fill out a loan application form. Be sure to include all the necessary documents, such as proof of income and collateral.
  4. Complete the application process. The lender might ask for extra information or more documents to make a decision.
  5. Sign the contract. Read through all the documentation carefully so you understand what you agree to.
  6. Get the funds. If approved, you can move forward with funding your restaurant equipment purchase.
Apply For A Business Loan!

What Is Restaurant Equipment Financing?

Restaurant equipment financing is a financial product that gives you the necessary funds to purchase restaurant-specific items, such as ovens and other appliances. It is an excellent way for restaurateurs to get the equipment they need without having to come up with all the money upfront or using their savings.

How Does Restaurant Equipment Financing Work?

Restaurants often rely on financing to acquire hard assets that will bring long-term benefits to the business, such as commercial kitchen appliances like walk-in refrigerators and ovens. Rather than paying the full cost upfront, restaurant owners can finance these purchases by taking a loan from a lender. The lender pays for the equipment or provides the funds to the owners, who repay the loan with interest in monthly installments until the loan is fully paid off. They are self-secured loans because the equipment itself serves as collateral. If you default on a loan, the lender can repossess and sell the equipment to recoup their losses. The loan terms depend on several factors, such as credit score, income, and the borrowed amount. The interest rate will also vary based on these criteria.

Benefits Of Restaurant Equipment Financing

  • Allows restaurants to spread out payments over time to access the necessary funds without breaking the bank in one lump sum payment.
  • Helps build credit scores by showing creditors that you're using debt responsibly while increasing your assets at the same time.
  • Allows cash to remain on hand, which is important in the restaurant business, as restaurants often experience seasonality.
  • Allows you to upgrade or replace existing kitchen tools without replacing your entire setup.

What Can You Use Restaurant Equipment Financing For?

Restaurant equipment financing can help you purchase new or used appliances and furniture, upgrade your existing equipment, and fund marketing costs.  For example, purchase everything from commercial kitchen equipment such as:
  • refrigerators
  • ovens
  • kitchen utilities like knives and cutting boards
  • full kitchen setups,
  • seating for dining rooms
  • cash registers
  • outdoor signage and seating
  • tableware and flatware
  • beverage systems
  • furniture pieces such as chairs and tables.
  • and more!

Restaurant Equipment Financing Alternatives


Crowdfunding has become increasingly popular among restaurants looking for quick funding without worrying about long-term debt obligations or steep upfront costs associated with other forms of lending. Crowdfunding offers low-risk, high-reward opportunities to finance restaurant equipment quickly as long as you can utilize an effective social media presence and marketing tactics.

Equipment Sale-Leaseback

With this financing method, the restaurant sells its existing equipment and then leases it back from the lender for a set term.

This can be extremely helpful for restaurants that already own equipment but are looking to free up some working capital while still retaining the use of their equipment.

Equipment Leasing

Equipment leasing allows a business to acquire the necessary equipment without high upfront costs or long-term debt obligations.

It also has the added benefit of upgrading the equipment at the end of the lease term, ensuring that your space can stay up-to-date with the latest technology and trends.

Angel Investing

Angel investors tend to be wealthy individuals or groups investing in start-ups and small businesses.

These investments usually come with mentorship, advice, and ancillary services that can help the business succeed.

Angel investing is an excellent option for restaurant owners seeking additional support and guidance as they grow their businesses.

Camino Financial Can Help You

You can use Camino Financial business loans to finance restaurant equipment. Our loans have flexible terms and competitive interest rates, making this an accessible option for restaurant owners. Camino Financial allows you to apply for a loan online in just minutes. We will work with you to find the best terms and rates for your business. If we approve your application, you'll be able to get the equipment your restaurant needs quickly and affordably. At Camino Financial, we make it easy to finance the machinery and tools you need to run a successful restaurant. Apply For A Business Loan!  


What are the reasons to finance your restaurant equipment?

Financing your restaurant equipment can help preserve cash flow, allow for equipment upgrades, provide tax benefits, offer predictable and affordable monthly payments, provide flexibility, and ultimately result in equipment ownership. These benefits can help you grow and improve your business without sacrificing cash flow or settling for outdated equipment.

What is the difference between equipment financing vs. leasing?

Equipment financing involves borrowing money from a lender to purchase equipment, which is then paid back over a set period with interest. The borrower owns the equipment and is responsible for maintaining and insuring it. On the other hand, leasing involves renting equipment for a set period. At the end of the lease term, the lessee may have the option to purchase the equipment at a discounted price.

Are there equipment financing options for bad credit?

Yes, there are equipment financing options available for businesses with bad credit. While bad credit may limit your options and result in higher interest rates, some lenders specialize in working with businesses with less-than-perfect credit.

What credit score do you need for equipment financing?

A minimum credit score of 575 to 650 is typically required for equipment financing or small business loan options that allow you to make purchases.

How hard is it to get an equipment loan?

Obtaining commercial equipment loans can be relatively easy. Lenders are often willing to finance the purchase of new equipment due to its potential to increase a business's productivity.

What is the average interest rate for an equipment loan?

The average interest rate for an equipment loan is typically between 4% to 30% depending on the lender.

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