Get Competitive Terms and Rates for Start Up Restaurant Financing
Startup Restaurant Equipment Financing & Leasing
Opening a restaurant takes more than a great concept. Before the first customer walks through the door, you may need kitchen equipment, refrigeration, furniture, POS systems, signage and other business-essential equipment.
The question isn't only whether you can afford the equipment. It's how much cash you want tied up in equipment before your restaurant begins generating consistent revenue.
- Finance new or used restaurant equipment
- Startup financing programs available for qualified applicants
- Multiple equipment vendors may be combined into one financing request
- Equipment generally serves as the primary collateral
- Equipment financing and leasing options available
Financing equipment can help preserve the working capital you'll still need for payroll, food inventory, rent, deposits, marketing and unexpected opening expenses.
See Your Restaurant Financing Options
Tell us about your restaurant and equipment purchase. Program availability and terms depend on credit, equipment, vendor and overall transaction strength.
Why Finance Restaurant Equipment Instead of Paying Cash?
A startup restaurant can run short of working capital long before it runs out of equipment. Paying cash for every oven, refrigerator, prep table and POS system eliminates a monthly payment, but it can also leave the business undercapitalized when operating expenses begin.
Preserve Working Capital
Keep more cash available for payroll, inventory, rent, deposits, permits, marketing and opening expenses.
Match the Cost to the Equipment
Instead of paying the entire equipment cost upfront, spread the expense over time while the equipment is being used to generate revenue.
Buy What the Operation Needs
Financing may allow you to purchase the equipment your restaurant actually needs instead of choosing cheaper equipment simply because cash is limited.
What Restaurant Equipment Can Be Financed?
Restaurant equipment financing can cover considerably more than ovens and refrigerators. The equipment generally needs to be business-essential and appropriate for the restaurant operation.
Kitchen Equipment
Ovens, ranges, fryers, grills, mixers, food processors, microwaves, dishwashers and other commercial cooking equipment.
Refrigeration
Walk-in coolers, commercial refrigerators, freezers, ice machines and refrigerated preparation equipment.
Preparation & Storage
Worktables, shelving, preparation stations, commercial sinks and other back-of-house equipment.
Dining & Front of House
Tables, chairs, bar stools, fixtures and other qualifying restaurant furnishings.
POS & Technology
Point-of-sale systems, order management equipment, payment systems and qualifying restaurant technology.
Signage & Specialty Equipment
Qualifying building signage, specialty food-service equipment and other business-essential assets.
Equipment Financing vs. Equipment Leasing
Restaurant owners often use the terms equipment loan, financing and leasing interchangeably. They aren't necessarily the same transaction.
- Equipment Financing: Typically provides scheduled payments over an agreed term, with the equipment securing the financing.
- Lease-to-Own: Certain lease structures provide a defined purchase option at the end of the lease.
- Fair Market Value Lease: An FMV lease may provide different payment and end-of-term options, but ownership is not necessarily automatic.
Know What You're Signing
Don't assume every equipment lease ends with a $1 purchase. Read the actual agreement.
Pay particular attention to:
- End-of-term purchase option
- Automatic renewal provisions
- Notice requirements
- Early termination provisions
- Prepayment terms
- First and last payment requirements
- Security deposits
If someone describes the transaction as "lease-to-own," make sure the written agreement says the same thing.
How Startup Restaurant Equipment Financing Is Underwritten
An established restaurant can provide years of operating history. A startup cannot. That means lenders may place more emphasis on the owners, credit profile, available liquidity, equipment, vendor and overall strength of the project.
| Underwriting Area | What the Lender Is Looking At |
|---|---|
| Personal Credit | For a startup, owner credit can be an important factor in approval, pricing and whether upfront money is required. |
| Equipment | The lender wants to verify that the equipment is appropriate, identifiable and essential to the restaurant operation. |
| Equipment Vendor | The equipment dealer may need to be approved so the lender can verify the seller and confirm delivery of the equipment. |
| Bank Statements & Liquidity | Statements may be used to verify banking history, available funds and the ability to cover deposits, startup costs or required upfront money. |
| Restaurant Experience | Restaurant, hospitality or management experience can strengthen a startup financing request, particularly on larger transactions. |
| Total Project Cost | Equipment is only one part of opening a restaurant. A lender may consider whether the overall project appears adequately capitalized. |
What Do I Need to Apply?
Restaurant equipment financing generally requires less documentation than many traditional commercial loans, but the exact requirements depend on the transaction.
Complete an Application
Provide basic information about the business, owners and requested financing.
Equipment Quote
Provide an invoice or vendor quote showing the equipment you intend to purchase.
Financial Information
Depending on the program, recent bank statements or additional financial information may be requested.
Review Your Options
Available programs can then be compared based on approval, payment, term and transaction requirements.
The Equipment and Vendor Must Make Sense
Equipment Approval
The lender needs to understand exactly what it is financing. The equipment should make sense for the business.
A restaurant purchasing commercial ovens, refrigeration, POS systems and kitchen equipment makes sense.
A restaurant attempting to finance unrelated heavy construction equipment would raise an obvious underwriting question.
Vendor Approval
The equipment vendor is also part of the transaction. Before releasing funds, the financing company may verify that the vendor is legitimate and able to deliver the equipment being purchased.
This helps protect the borrower, lender and equipment transaction from fraud or delivery problems.
Look Beyond the Monthly Payment
A low monthly payment doesn't automatically mean you have the best financing offer. Before accepting an equipment financing agreement, understand the entire transaction.
Understand Your Upfront Cash Requirement
- Down payment, if required
- Security deposit
- First and/or last payment
- Sales tax
- Delivery costs
- Installation
- Insurance requirements
- Warranty or service costs
Understand the Contract
- Monthly payment
- Financing term
- Purchase option
- Prepayment provisions
- Early termination provisions
- Automatic renewal
- End-of-term notification requirements
- Maintenance responsibilities
Don't Finance the Equipment and Forget the Working Capital
One of the biggest mistakes a new restaurant can make is focusing entirely on the cost of opening while underestimating the cash needed after opening.
The restaurant still needs money for:
- Payroll
- Food and beverage inventory
- Rent
- Utilities
- Insurance
- Advertising and promotions
- Repairs and maintenance
- Unexpected expenses
Equipment Is Only Part of Your Startup Budget
A restaurant may have $100,000 available and $75,000 of equipment to purchase.
Paying cash for the equipment leaves only $25,000 available to actually open and operate the restaurant.
Financing some or all of the equipment may preserve significantly more liquidity.
That doesn't mean you should finance everything simply because financing is available. Your monthly payments still need to make sense within a realistic operating budget.
Stop Bank Hopping for Restaurant Equipment Financing
Going from bank to bank trying to determine who will finance a startup restaurant can waste time. More importantly, lenders don't all underwrite restaurant equipment transactions the same way.
A transaction that doesn't fit one lender's credit requirements may fit another lender's startup, equipment or credit-tier program.
Liberty Capital Group can review the transaction and help identify financing sources based on the restaurant's stage, equipment type, credit profile and requested financing amount.
That doesn't guarantee approval. It does mean you don't have to personally figure out the credit guidelines of every equipment financing company before determining where your transaction fits.
Startup Restaurant Equipment Financing FAQ
Can a brand-new restaurant qualify for equipment financing?
Yes. Startup equipment financing programs are available. Because a new restaurant doesn't have established operating history, the lender may place greater emphasis on personal credit, liquidity, restaurant experience, equipment and the overall transaction.
Do I always need a down payment?
No. Qualified applicants may have low-upfront or no-down-payment options. Other approvals may require a down payment, security deposit, advance payment or additional cash into the transaction.
Can I finance used restaurant equipment?
Used equipment may be financeable depending on the equipment's age, condition, type, purchase price and vendor.
Can I finance equipment from more than one vendor?
Potentially. Multiple vendor invoices may be combined into one financing transaction, subject to lender approval of the vendors, equipment and total financing request.
Is the restaurant equipment the collateral?
In equipment financing, the financed equipment generally serves as the primary collateral. Personal guarantees or other requirements may apply depending on the program.
Will applying affect my personal credit?
The initial review may use a soft credit inquiry depending on the program. A financing source may require a hard credit inquiry before final approval or funding.
Should I finance equipment if I have enough cash to buy it?
Not automatically. Compare the cost of financing against the value of keeping liquidity inside the business.
For a startup restaurant, cash reserves can be especially important because purchasing the equipment is only one part of the total cost of opening and operating the restaurant.
How quickly can restaurant equipment financing be approved?
Timing depends on the requested amount, applicant, equipment, vendor and documentation required. Smaller equipment transactions can generally be reviewed faster than larger or more complex startup projects.
Get a Restaurant Equipment Financing Quote
Have your equipment quote or invoice ready. Submit your application and Liberty Capital Group can review your restaurant equipment financing request and available financing programs.
Apply for Financing Get a No-Credit-Check QuoteQuestions? Call 888-588-4128
Financing is subject to credit approval, program guidelines, equipment and vendor eligibility, and other underwriting requirements. Terms, rates, advance payments and documentation requirements vary by applicant and transaction.
Covers many types of equipment we can finance.
Easier to get than a traditional business loan
Less paperwork
Fast processing time
Less stringent requirements for qualifying
No collateral needed, the equipment is the collateral
May require less credit score for you and your business as well
Our small business financing experts are available to guide you through the funding Process.
Despite technological advancements, loans, especially in restaurant and hospitality equipment financing, predominantly involve personal interaction with an underwriter to ensure as fraud prevention. Automation may not suffice, particularly when dealing with a third party like the vendor and the complexities of equipment purchase. In such scenarios, business owners are often better served by collaborating with a Business Loans Broker like Liberty Capital Group, Inc., who can steer them in the right direction.
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