How does restaurant equipment financing work?

What restaurant equipment financing covers

Restaurants are capital-intensive: a full commercial kitchen buildout for a new 60-seat restaurant can run $150,000–$500,000+ in equipment alone. Restaurant equipment financing covers: commercial ranges and ovens ($3,000–$30,000+), walk-in coolers and refrigeration ($5,000–$30,000), commercial dishwashers ($3,000–$15,000), ventilation hoods and fire suppression ($10,000–$50,000), POS systems and kitchen display systems ($5,000–$25,000), prep tables and smallwares, dining room furniture, and bar equipment. These assets qualify for equipment loans (you own the equipment), equipment leases (you rent, option to buy), or Section 179 first-year expensing if purchased.

Section 179 and depreciation for restaurant equipment

Under IRS Publication 946, restaurant equipment is 5-year MACRS property and qualifies for the Section 179 first-year expensing election. A restaurant buying $200,000 in kitchen equipment can potentially deduct the full $200,000 in year one instead of depreciating at roughly $40,000/year over 5 years. The One Big Beautiful Bill Act raised the Section 179 limit to $2,560,000 for the 2026 tax year, up from $1,220,000 in 2024. Bonus depreciation, permanently restored to 100% for property placed in service after January 19, 2025, also applies to new and used restaurant equipment — compare the two write-off paths with the Section 179 vs. bonus depreciation calculator. Qualified Improvement Property (QIP) — tenant improvements to restaurant interior — qualifies for 15-year depreciation and Section 179 treatment, which is significant for restaurant buildouts.

Manufacturer and distributor financing

Major restaurant equipment manufacturers and distributors offer captive financing programs — typically point-of-sale financing at the time of equipment purchase. These restaurant-equipment-manufacturer programs are convenient but compare their rates against independent equipment lenders before signing. Rates on captive programs range from promotional (0% for qualified buyers) to 15%+ APR for weaker credit profiles. Always get at least one independent quote. The SBA 7(a) program is also commonly used for larger restaurant equipment packages — particularly when opening a new location or doing a full kitchen renovation.

Qualification and typical terms

Restaurant equipment loans typically run 3–7 years. Rates range from 6–20% APR depending on credit and lender. Qualification: 600+ personal FICO (equipment lenders are more flexible than general business loan lenders), 1+ year in operation, and revenue sufficient to cover debt service. Restaurants face higher equipment financing scrutiny than other industries due to high failure rates — lenders want to see consistent deposit history, not just gross sales. The Federal Reserve's newest Small Business Credit Survey (2025 edition, published March 2026) breaks approval odds down by the applicant's own credit risk: nationally, only 30% of riskier applicants were approved for at least some financing, versus 60% of safer applicants -- a gap a higher-failure-rate sector like restaurants sits on the wrong side of, which is exactly why a lender-financed equipment purchase (asset as collateral) clears underwriting more easily than an unsecured working-capital request. On the loan-program side, SBA's 504 program -- often used for the real-estate-plus-major-equipment package of a full kitchen buildout -- financed 6,750 loans totaling $7.8 billion nationally in fiscal year 2025.

Apply at ClearValue Lending

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