If you're opening a new restaurant or upgrading an existing kitchen, the upfront cost of commercial equipment can hit hard. A chattel mortgage or other equipment finance structure lets you spread that cost over time while keeping your cashflow intact for rent, wages, and stock.
Why restaurant equipment suits structured finance
Restaurant equipment holds its value and serves as collateral, which makes it suitable for equipment finance. Lenders can secure the loan against the assets themselves, whether that's a combi oven, a blast chiller, or a full coolroom fitout. That security often translates to more accessible approval terms than an unsecured business loan, particularly if your trading history is short or you're still building profit margins.
Consider a café operator who wants to add a second espresso machine and a display fridge to handle morning trade. The equipment costs $28,000. Rather than drawing down that amount from a line of credit or delaying the purchase, they arrange a chattel mortgage with fixed monthly repayments over four years. The equipment is installed within a fortnight, revenue grows immediately, and the repayments sit comfortably within the additional margin the new setup generates.
How a chattel mortgage works for hospitality fitouts
A chattel mortgage is a loan secured against the equipment you're buying. You own the asset from day one, which means you can claim depreciation and the interest portion of each repayment as a tax deduction. At the end of the term, there's typically a residual payment, though you can structure the loan with or without one depending on how you want to manage your cashflow.
This structure is common for work vehicles and factory machinery, but it's equally relevant when you're buying new equipment for a commercial kitchen. The fixed monthly repayments make budgeting predictable, and because the loan is secured, the interest rate is generally lower than unsecured options. You can read more about how equipment finance applies across industries, but the principles hold whether you're financing a tractor or a tandoor oven.
What counts as restaurant equipment you can finance
Pretty much anything that's essential to your operation and has a useful life beyond a year. Commercial ovens, grills, fryers, refrigeration, dishwashers, food processors, espresso machines, exhaust systems, coolrooms, shelving, and point-of-sale hardware all qualify. If it's a capital purchase rather than a consumable, it's likely financeable.
Some lenders will also finance fitout costs if they're tied to the equipment installation, though this depends on how the invoice is structured. If you're upgrading existing equipment or buying a full kitchen package from a supplier, bundling everything into one loan amount keeps the process straightforward and avoids splitting payments across multiple facilities.
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How much deposit do you need
Most lenders will finance up to 100% of the equipment cost if your business financials support it and the equipment itself holds sufficient value. If you're a startup or your trading history is thin, expect to put down 10% to 20%. The deposit reduces the lender's risk and often improves the interest rate you're offered.
In our experience, clients who can show a solid business plan and some operating history find it easier to access higher loan-to-value ratios. If you're buying second-hand equipment, lenders may cap the finance at 70% to 80% of the purchase price, depending on age and condition.
Tax deductions and how they apply
Because you own the equipment under a chattel mortgage, you can claim the full cost as a depreciation deduction over the asset's effective life. You can also claim the interest component of your repayments. For plant and equipment finance, that makes the arrangement more tax effective than an operating lease, where you're effectively renting the asset and can only claim the lease payments.
If the equipment qualifies for instant asset write-off provisions, you may be able to deduct the entire purchase price in the year you buy it, subject to the current threshold and eligibility rules. Your accountant will confirm whether your situation suits that approach, but it's worth flagging early because it can shift the timing of your purchase to maximise the deduction.
Refinancing or upgrading mid-term
Restaurant equipment wears hard. If you're halfway through a loan term and need to replace or add equipment, you can refinance the existing facility and roll the new purchase into a single agreement. That keeps your repayments consolidated and avoids stacking multiple monthly commitments.
Say you financed a coolroom and prep benches two years ago, and now you want to add a commercial dishwasher and a second oven. Rather than starting a separate loan, you refinance the remaining balance and include the new equipment, resetting the term and adjusting the repayment to suit your current cashflow. It's a common approach when you're scaling up or replacing ageing assets before they fail during service. The same principle applies if you're looking at plant and machinery finance for other parts of your operation.
How quickly can you settle
Once you've chosen your equipment and received a quote, the finance application typically takes two to five business days, depending on the lender and how complete your documentation is. If you're an existing business, you'll need recent financials, a business bank statement, and details of the equipment you're buying. Startups may need a business plan and personal financial information.
After approval, settlement happens as soon as the supplier is ready to deliver. Some lenders pay the supplier directly, others transfer funds to your account. Either way, you're usually up and running within a week or two of applying, which matters when you're trying to open on schedule or respond to a busy period.
Choosing between new and used equipment
New equipment usually qualifies for longer loan terms and higher finance amounts because the residual value is easier to assess. Used equipment is cheaper upfront, but lenders may shorten the term or reduce the loan-to-value ratio to account for wear and depreciation. If you're buying second-hand, make sure the equipment has been serviced and comes with documentation, because lenders will want proof of condition and remaining useful life.
For specialised machinery like wood-fired ovens or custom refrigeration, new is often the safer option because parts and support are easier to access. For standard items like bench fridges or mixers, quality used equipment can deliver solid value if the price and condition stack up.
What happens if your business structure changes
If you're trading as a sole trader and later incorporate, or if you bring in a partner or restructure, you'll need to notify your lender. Most chattel mortgage agreements can be transferred to a new entity, but the lender will reassess the facility and may require updated financials or personal guarantees. It's not a deal-breaker, but it's worth discussing with your broker before you make the change so you're not caught mid-settlement with a facility that needs to be rewritten.
The same applies if you're buying an existing restaurant and taking over equipment that's still under finance. The seller may offer to transfer the loan, but the lender will treat it as a new application with you as the borrower. You'll need to decide whether you want to assume the existing debt or arrange your own facility to buy the equipment outright as part of the business sale. For broader context on how asset finance works across different scenarios, the principles of security and repayment remain consistent.
When to involve your broker
If you're comparing finance options or you're not sure which structure suits your situation, a broker can access equipment finance options from banks and lenders across Australia and present the ones that fit your business needs. Some lenders specialise in hospitality, others have better rates for newer businesses or larger fitouts. A broker also handles the paperwork and chases approvals, which frees you up to focus on getting your kitchen ready.
Call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
Can I finance second-hand restaurant equipment?
Yes, most lenders will finance used commercial equipment, though they may limit the loan amount to 70-80% of the purchase price and shorten the loan term. You'll need documentation showing the equipment's condition and service history.
Do I need a deposit to finance restaurant equipment?
Many lenders will finance up to 100% of the equipment cost if your business financials are strong and the equipment holds sufficient value. Startups or businesses with limited trading history may need a deposit of 10-20%.
What tax deductions apply to equipment finance?
Under a chattel mortgage, you can claim depreciation on the equipment and deduct the interest portion of your repayments. If the equipment qualifies for instant asset write-off, you may be able to deduct the full purchase price in the year you buy it, subject to eligibility.
How long does equipment finance approval take?
Once you've submitted your application and documentation, approval typically takes two to five business days. Settlement happens as soon as the supplier is ready to deliver, usually within a week or two of approval.
Can I refinance existing equipment to buy more?
Yes, you can refinance the remaining balance on your current loan and roll in new equipment purchases. This consolidates your repayments into a single agreement and avoids stacking multiple monthly commitments.
