Equipment Financing for Restaurants: Walk-Ins, Ovens, POS Systems and More
A practical guide to financing commercial kitchen equipment including walk-in coolers, commercial ovens, POS systems, and more. Includes typical costs and financing structures.
Commercial kitchen equipment is expensive. A single combi oven can run $15,000-50,000. A full kitchen buildout easily hits $150,000-300,000. Most restaurant owners cannot (and should not) pay cash for everything.
Equipment financing exists precisely for this situation. The equipment itself serves as collateral, which reduces lender risk and often makes approval easier than unsecured financing.
What Commercial Kitchen Equipment Actually Costs
Prices vary by brand, capacity, and features, but here are realistic ranges for common equipment:
| Equipment | Budget Option | Mid-Range | Premium |
|---|---|---|---|
| Walk-in cooler (8x10) | $4,000-6,000 | $7,000-10,000 | $12,000-15,000 |
| Walk-in freezer (8x10) | $6,000-8,000 | $10,000-14,000 | $16,000-20,000 |
| Commercial range (6-burner) | $2,000-4,000 | $5,000-8,000 | $10,000-15,000 |
| Convection oven | $3,000-5,000 | $6,000-10,000 | $12,000-20,000 |
| Combi oven | $8,000-15,000 | $18,000-30,000 | $35,000-50,000 |
| Commercial dishwasher | $3,000-5,000 | $7,000-12,000 | $15,000-25,000 |
| Ice machine (500 lb/day) | $2,500-4,000 | $5,000-7,000 | $8,000-12,000 |
| POS system (full setup) | $2,000-4,000 | $5,000-8,000 | $10,000-15,000 |
| Hood and ventilation | $3,000-6,000 | $8,000-15,000 | $20,000-40,000 |
Financing Options Compared
You have several paths to finance restaurant equipment:
| Option | Typical Rates | Terms | Best For |
|---|---|---|---|
| Equipment loan | 8-20% | 2-7 years | Purchasing equipment you want to own |
| Equipment lease | 10-25% | 2-5 years | Upgrading frequently, conserving cash |
| SBA 7(a) | 10-13% | Up to 10 years | Large packages, lower payments |
| SBA 504 | 5-7% (CDC portion) | Up to 20 years | Heavy equipment + real estate |
| Vendor financing | Varies widely | 2-5 years | Convenience, bundled with purchase |
Equipment Loans: You Own It
Equipment loans are straightforward: borrow money, buy equipment, pay back over time. At the end, you own the equipment outright.
- Down payment: Usually 10-20% of equipment cost
- Collateral: The equipment itself (plus sometimes a general lien)
- Term: Matched to equipment useful life, typically 3-7 years
- End of term: Equipment is yours, no more payments
Why Equipment Loans Are Often Easier
Because the equipment secures the loan, lenders take less risk. Many equipment lenders approve deals that banks would decline for unsecured financing. Credit requirements are often lower than other loan types.
Equipment Leases: Flexibility Over Ownership
Leases let you use equipment without buying it. Common structures include:
- $1 buyout lease: Essentially a loan — you own it at the end for $1
- Fair market value lease: Return, purchase at market value, or renew at end
- Operating lease: Lower payments, return at end (may not show on balance sheet)
Leases often have higher total cost than loans but offer benefits: lower monthly payments, easier upgrades, potential tax advantages (consult your accountant), and preserved cash.
Real-World Scenario: Full Kitchen Package
The situation: A chef opening a new fast-casual concept needs to equip a 1,500 sq ft kitchen. The equipment list totals $127,000:
- Walk-in cooler and freezer: $22,000
- Six-burner range with oven: $8,000
- Convection oven: $7,500
- Fryers (2): $6,000
- Flat-top grill: $4,500
- Prep tables and refrigerated bases: $18,000
- Dishwasher: $9,000
- Smallwares and misc: $12,000
- Hood and ventilation: $25,000
- POS system: $8,000
- Ice machine: $4,000
- Delivery and installation: $3,000
The financing approach: She obtained equipment financing for $115,000 (put $12,000 down from savings). 6-year term at 14% APR. Monthly payment: approximately $2,200.
Why it worked: The equipment served as collateral. She had 5 years of restaurant management experience (though this was her first ownership). Her business plan was solid, and she had a signed lease for the space.
New vs. Used Equipment
Used commercial kitchen equipment can save 40-60%, but financing differs:
| Factor | New Equipment | Used Equipment |
|---|---|---|
| Price | Full retail | 40-60% of new |
| Financing availability | Widely available | Fewer lenders, shorter terms |
| Warranty | 1-5 years typically | Often none or limited |
| Useful life for loan term | Full expected life | Reduced — lenders may cap term |
| Approval | Standard process | May need equipment appraisal |
Used Equipment Strategy
Some items make sense to buy used (stainless tables, shelving, basic refrigeration). Others are risky used (compressors, complex electronics). Finance used equipment over shorter terms since remaining useful life is uncertain.
Vendor Financing: Convenience vs. Cost
Many equipment dealers offer in-house financing or partnerships with finance companies. This can be convenient but evaluate carefully:
- Pros: One-stop shopping, may bundle service agreements, quick approval
- Cons: Often higher rates than independent financing, limited negotiating leverage
- Watch for: Deferred interest (interest accrues from day 1 if not paid in full)
- Compare: Get vendor quote and independent financing quote, then decide
POS System Financing
Modern POS systems are often financed separately from kitchen equipment:
- Hardware cost: $3,000-15,000 depending on terminals, tablets, printers, readers
- Subscription fees: $50-300/month ongoing for software
- Financing options: Vendor financing, equipment loans, or rolled into larger packages
- Lease vs. buy: Many restaurants lease POS to upgrade more easily
Note that some POS providers (Toast, Square, etc.) offer their own financing programs tied to your processing. Evaluate the total cost including payment processing fees.
Section 179 and Tax Considerations
Equipment purchases often qualify for tax benefits:
- Section 179: Deduct full equipment cost in the year of purchase (up to annual limits)
- Bonus depreciation: Additional first-year depreciation options
- Lease treatment: Operating leases may be deductible as expenses
Consult Your Accountant
Tax treatment depends on your specific situation, entity structure, and equipment type. Work with your accountant before making financing decisions based on tax assumptions.
Red Flags in Equipment Financing
Watch for these warning signs when evaluating financing offers:
- Cannot calculate APR — If the lender will not give you a clear APR, something is hidden
- Prepayment penalties — Some lenders charge significant penalties for early payoff
- Automatic renewal clauses — Leases that renew unless you cancel 90 days early
- Personal asset liens — Avoid lenders who want liens on your house for equipment loans
- Balloon payments — Low monthly payments with a large final payment can be a trap
Matching Equipment to Financing
| Equipment Type | Useful Life | Suggested Term | Financing Type |
|---|---|---|---|
| POS/technology | 3-5 years | 2-4 years | Lease or short-term loan |
| Smallwares | 2-5 years | Pay cash or short-term | Avoid financing if possible |
| Standard appliances | 7-10 years | 5-7 years | Equipment loan |
| Heavy equipment (ovens, hoods) | 10-15 years | 7-10 years | Equipment loan or SBA |
| Walk-ins (built-in) | 15-20 years | 10+ years | SBA or long-term loan |
Getting Started
Before you shop for equipment financing:
- Create your equipment list — Know exactly what you need and approximate costs
- Get quotes from vendors — Multiple quotes give negotiating leverage
- Calculate your budget — What monthly payment fits your projected cash flow?
- Check your credit — Know your score before applying
- Gather documentation — Tax returns, bank statements, business financials
Liminal connects you with equipment financing lenders who understand restaurant needs. One application, multiple offers, free and no credit impact. Compare your options before committing.
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Read more →Important Disclosure
Not Financial Advice: The information provided in this article is for general informational purposes only and does not constitute financial, legal, or professional advice. You should consult with qualified professionals before making any financial decisions.
No Guarantee of Financing: Liminal Lending Co. is a business loan marketplace that connects borrowers with third-party lenders. We are not a lender and do not make credit decisions. Submitting an application does not guarantee approval or funding. Loan terms, rates, and availability vary by lender and are subject to borrower qualifications and lender criteria.
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Rate Information: Rates, terms, and fees mentioned in this article are estimates based on publicly available information and may not reflect current market conditions or specific lender offers. Actual rates depend on creditworthiness, business financials, and lender policies.
Information May Change: Financial markets, lending regulations, and economic conditions are subject to rapid change. While we strive to keep our content accurate and up-to-date, information in this article may become outdated. Always verify current rates, terms, program availability, and regulatory requirements with lenders and official sources before making financial decisions.