Opening or upgrading a restaurant requires significant capital investment in commercial kitchen equipment, dining furniture, fit-out, and technology. A full commercial kitchen fit-out can easily cost $150,000 to $400,000 before you’ve even opened the doors. At Mortgage & Finance Advisory, we help hospitality business owners across Geelong, the Surf Coast, Melbourne, and regional Victoria access equipment finance solutions designed for the unique challenges of the food service industry.
This guide covers everything restaurant owners need to know about financing commercial kitchen equipment and hospitality fit-outs: from the types of equipment you can finance and current interest rates to application requirements, tax benefits, and strategies for securing approval in an industry that lenders sometimes view as higher risk.
Almost everything needed to set up or upgrade a hospitality venue can be financed. Lenders evaluate each item based on its useful life, residual value, and how easily it could be resold if needed.
| Category | Equipment Examples | Typical Cost Range |
|---|---|---|
| Cooking Equipment | Commercial ovens, ranges, fryers, chargrills, combi ovens, woks | $5,000 to $80,000 |
| Refrigeration | Walk-in cool rooms, freezers, under-counter units, display fridges | $3,000 to $50,000 |
| Food Preparation | Mixers, slicers, food processors, vacuum sealers, prep benches | $1,000 to $25,000 |
| Ventilation & Exhaust | Commercial range hoods, exhaust systems, make-up air units | $10,000 to $60,000 |
| Dishwashing | Commercial dishwashers, glasswashers, pot wash stations | $5,000 to $30,000 |
| Coffee Equipment | Espresso machines, grinders, water filtration systems | $5,000 to $35,000 |
| POS & Technology | POS terminals, kitchen display systems, ordering tablets, CCTV | $3,000 to $20,000 |
| Furniture & Fit-Out | Tables, chairs, booths, bar fittings, lighting, flooring | $20,000 to $200,000 |
| Vehicles | Food trucks, delivery vehicles, refrigerated vans | $30,000 to $250,000 |
The hospitality industry has a higher failure rate than many other sectors. Statistics suggest that around 60% of new restaurants close within three years of opening. This makes lenders naturally cautious, but it doesn’t mean finance is unavailable. It means you need to understand what lenders look for and how to present your application in the strongest possible light.
Factors that work against hospitality businesses in lending assessments include the high failure rate statistics, seasonal and variable revenue patterns, reliance on discretionary consumer spending, thin profit margins (typically 3-9% net), and the limited resale value of custom fit-outs that can’t be easily removed from a premises.
However, there are specialist hospitality lenders who understand the sector and focus on different indicators of viability: consistent trading history, strong revenue trends, experienced operators, prime locations, and diversified revenue streams (dine-in, takeaway, catering, events).
The most popular option for established restaurants structured as companies. You take ownership immediately, can claim depreciation and GST credits, and build equity in the equipment. Monthly repayments are fixed and predictable, which helps with cash flow forecasting in an industry where revenue can fluctuate week to week. A residual (balloon) payment can be added to reduce monthly costs.
Suitable for restaurants that prefer to keep equipment off their balance sheet. All lease payments are tax deductible, and at the end of the term you can purchase the equipment at its residual value, return it, or upgrade. This is a good option for restaurants planning to refurbish or rebrand in the medium term, as you’re not locked into owning equipment that might not suit the new concept.
An operating lease works well for technology that evolves quickly or equipment you might want to upgrade regularly. POS systems, coffee machines (often supplied on lease by coffee suppliers), and display refrigeration are commonly financed this way. Payments are fully deductible and typically lower than other finance types because you’re not financing the full asset value.
For new venues or major renovations, fit-out finance packages combine all equipment, furniture, fixtures, and renovation costs into a single facility. This is often more efficient than financing each element separately and gives you a single monthly repayment covering everything from the commercial oven to the dining chairs to the lighting installation.
| Feature | Chattel Mortgage | Finance Lease | Operating Lease | Fit-Out Package |
|---|---|---|---|---|
| Best for | Major equipment | Flexibility seekers | Tech/POS | New venues |
| Ownership | Immediate | End of term | Never | Varies |
| Tax benefit | Depreciation + GST | Full deduction | Full deduction | Mixed |
| Typical term | 3 to 7 years | 3 to 5 years | 2 to 4 years | 3 to 7 years |
| Business Profile | Indicative Rate | Key Factors |
|---|---|---|
| Established venue (5+ years, profitable) | 6.49% to 8.99% | Proven track record, strong BAS |
| Established venue (2 to 5 years) | 7.49% to 10.99% | Consistent revenue growth |
| New venue (experienced operator) | 8.99% to 12.99% | Industry experience, business plan, deposit |
| New venue (first-time operator) | 10.99% to 14.99% | Deposit required, guarantor may help |
Given the higher scrutiny applied to hospitality applications, preparation is key. Here’s how to give yourself the best chance of approval at competitive rates.
Show consistent revenue trends: Lenders want to see that your venue’s revenue is stable or growing. Provide at least 12 months of bank statements and BAS showing consistent turnover. If you have seasonal fluctuations (common in tourist areas like the Surf Coast), explain the pattern and show year-on-year growth.
Demonstrate industry experience: If you’re opening a new venue, your personal hospitality experience matters enormously. A chef with 15 years of industry experience opening their first venue is a very different risk proposition to someone with no hospitality background. Document your experience, qualifications, and any management roles you’ve held.
Prepare a solid business plan: For new venues or major expansions, a detailed business plan shows lenders you’ve thought through the financials. Include projected revenue and expenses, your target market, competitive analysis, and how the financed equipment will contribute to revenue generation.
Offer a deposit: Even 10-20% of the equipment cost demonstrates financial commitment and reduces the lender’s exposure. For newer businesses, a deposit can be the difference between approval and decline.
Keep personal credit clean: Directors’ personal credit history is checked for all business finance applications. Ensure there are no defaults, late payments, or excessive credit enquiries on your personal credit file before applying.
A café owner in Geelong needed $95,000 to upgrade their commercial kitchen: a new combi oven, commercial dishwasher, walk-in cool room, and extraction system. Their bank declined the application citing “hospitality risk.” We submitted the same application to a specialist hospitality lender who assessed the café’s 4-year trading history, growing revenue trend, and the owner’s 12 years of industry experience. The result was approval at 7.49% over 5 years with monthly repayments of $1,905, well within the café’s cash flow capacity. The new equipment increased their catering capability, adding an estimated $3,000 per month in additional revenue.
Opening a new venue presents the biggest financing challenge because there’s no trading history to demonstrate viability. However, finance is still available through the right channels.
For new openings, lenders typically want to see the operator’s personal industry experience (minimum 3-5 years), a comprehensive business plan with realistic financial projections, a signed lease agreement for the premises, detailed equipment quotes from suppliers, evidence of any personal investment (deposit), and the operator’s personal financial position (assets, liabilities, income).
Some lenders also offer “start-up packages” for hospitality that combine equipment finance with a small working capital component to cover the first few months of operating costs before revenue stabilises. These are particularly valuable because new restaurants typically take 3-6 months to reach consistent revenue levels.
The choice between new and used equipment affects both your upfront costs and your finance terms.
| Factor | New Equipment | Used Equipment |
|---|---|---|
| Purchase price | Full retail | 30-60% of new price |
| Interest rates | Lower (from 6.49%) | Higher (+1-2%) |
| Max loan term | Up to 7 years | Usually 3-5 years |
| Warranty | Full manufacturer warranty | Limited or none |
| Approval ease | Easier (higher resale value) | Stricter (age limits apply) |
Used commercial kitchen equipment can offer excellent value, particularly for items that don’t change significantly over time (stainless steel benches, shelving, basic cooking equipment). However, for items where efficiency and reliability are critical (combi ovens, refrigeration, dishwashers), new equipment with full warranties often proves more cost-effective over its lifetime due to lower energy costs and fewer breakdowns.
Understanding the tax implications helps you calculate the true cost of financing equipment. For GST-registered businesses using a chattel mortgage, you can claim the full GST on the purchase price in your next BAS. On a $110,000 kitchen fit-out (including GST), that’s $10,000 back within weeks. You can also claim depreciation on the equipment, and under the instant asset write-off scheme, eligible small businesses may be able to deduct the full cost in the year of purchase.
For finance leases and operating leases, the entire lease payment is tax deductible as a business expense. While you can’t claim depreciation (since you don’t own the asset), the full deductibility of payments provides a different but often equally valuable tax benefit.
Over-specifying equipment for a new venue: It’s tempting to buy the best of everything, but a new restaurant should match equipment to expected volume. You can always upgrade individual items as the business grows. Financing $300,000 of top-tier equipment when a $180,000 setup would serve your initial needs creates unnecessary financial pressure during the critical early months.
Not factoring in installation costs: Commercial kitchen equipment often requires electrical upgrades, plumbing modifications, ventilation installation, and gas fitting. These costs can add 15-30% to the equipment price. Include all installation costs in your finance application to avoid scrambling for additional funds mid-fit-out.
Ignoring working capital needs: Equipment finance only covers the equipment. You still need working capital for stock, wages, rent, and marketing during the first few months. Don’t stretch your equipment finance budget so tight that there’s nothing left for operating costs.
Going directly to a bank: Banks are generally the most conservative lenders for hospitality. A broker can access specialist hospitality lenders, non-bank lenders, and private funders who understand the industry and offer more competitive terms for food service businesses.
Yes, food trucks and mobile catering equipment are financeable assets. The truck itself can be financed as a vehicle, while the kitchen fit-out inside can be covered by equipment finance. Some lenders offer combined facilities that cover both the vehicle and the fit-out in a single loan, simplifying the process.
Yes, because the finance is secured against the equipment, not the premises. However, lenders will consider your lease situation as part of the overall risk assessment. Having options to renew or extend your lease strengthens your application. If your lease is short with no renewal option, lenders may limit the term or require additional security.
Yes, as long as the equipment is delivered and installed in Australia. The lender pays the supplier directly upon delivery and installation confirmation. Import duties, shipping, and GST on imported goods should be factored into the total cost. Some specialist kitchen equipment from European manufacturers (Rational, Electrolux) is commonly financed this way.
For established venues with good financials, approval can be as fast as 24-48 hours. New venues or more complex applications typically take 3-7 business days. Having all your documentation ready before applying speeds up the process considerably.
You remain personally liable for the finance (through your director’s guarantee) regardless of whether the business continues operating. The lender can repossess the equipment and sell it, with any shortfall remaining your responsibility. This is why it’s critical not to over-commit on equipment finance and to maintain adequate insurance.
If your business has grown since taking out the original finance, or if market rates have dropped, refinancing can reduce your costs. We regularly help hospitality clients restructure existing equipment finance to better terms. The key is ensuring the savings outweigh any break costs from the existing agreement.
Get expert advice on equipment finance for your hospitality venue. We work with specialist lenders who understand the food service industry.
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About the Author
Melanie McNaughton is the founder of Mortgage & Finance Advisory, specialising in equipment finance and business lending across Geelong, the Surf Coast, Melbourne, and regional Victoria. With extensive experience helping hospitality business owners access the right finance solutions, Melanie understands the unique challenges of the food service industry and works with specialist lenders to secure competitive terms.
Director & Senior Finance Broker
With years of experience in mortgage broking and finance, Melanie helps clients across Geelong, the Surf Coast, Melbourne and regional Victoria navigate the complexities of home loans and business finance. Contact our team on 03 9020 2699.
