Equipment financing for restaurants lets you acquire commercial kitchen equipment, refrigeration, POS systems, and furniture with a loan or lease secured by the equipment itself. Approval is available down to a 550 credit score, same-day decisions are possible on deals up to $100,000, and the lender holds a lien on the equipment, not your cash flow or personal assets.
Why restaurant equipment financing gets declined more than other industries
Lenders view food service as elevated risk. The Federal Reserve's Small Business Credit Survey consistently shows that accommodation and food services businesses face higher denial rates than most other industries. Lenders price that track record into their credit models, not just their rates.
The friction isn't personal. It comes from three structural problems that show up in restaurant credit files:
- Thin margins. Net profit margins in food service typically run 3% to 9%. Low margins mean limited debt-service coverage, and lenders model that directly.
- Industry default history. Lenders track performance by NAICS code. Food service codes carry higher historical default rates than retail or professional services, and underwriting models reflect that data.
- Inconsistent cash flow. A summer patio that flatlines in January reads as risk on bank statements. Seasonal swings that you navigate fine every year can look alarming to an automated credit model.
The solution isn't to hide these realities. It's to show the lender that your file is the exception. We cover how to do that below.
What types of restaurant equipment can you finance?
Most commercial kitchen equipment qualifies without trouble. The SBA and most direct equipment lenders include restaurants among eligible borrowers for equipment purchases, and GrowthPath covers approximately 90% of industries.
- Commercial ranges, ovens, fryers, and grills
- Walk-in coolers and freezers
- Refrigerated prep tables and display cases
- Commercial dishwashers and sinks
- Ventilation and hood systems
- Point-of-sale (POS) systems and kitchen display tech
- Bar equipment and draft systems
- Furniture and fixtures: booths, tables, chairs
- Food trucks and trailers
Where lenders pull back: highly specialized equipment with no secondary market, used equipment that is too old (most lenders cap at 7 to 10 years), and pure soft costs like installation or delivery billed separately from the equipment itself. The logic is simple. Equipment financing works because the lender can repossess and resell the collateral if you default. If the equipment has no resale market, the collateral is worth nothing.
What credit score do you need for restaurant equipment financing?
Equipment financing at GrowthPath goes down to a 550 credit score. The lower your score, the more the lender compensates by leaning on the equipment's collateral value and your revenue history. On app-only deals up to $100,000, same-day approvals are possible with just the application and a few months of bank statements.
A score above 650 puts you in a materially stronger position and typically qualifies for better terms. Above 700, lenders tend to compete for your business, which gives you negotiating room on rate and structure.
Time in business matters too. Startups under 12 months face a harder path. Most programs want to see that your restaurant is an operating business. If you are pre-opening, ask specifically about startup equipment programs: some lenders offer them, but the down payment requirement is usually higher.
For a full breakdown of how credit score, time in business, revenue, and equipment type interact across all equipment financing applications, see our post on equipment financing requirements.
New vs. used restaurant equipment: how lender appetite shifts
Financing new equipment is the simpler path. The cost is documented, the resale value is predictable, and lenders don't have to estimate condition or remaining useful life.
Used equipment financing is available, including private-party purchases from restaurants closing down. But lenders ask harder questions about used equipment:
- How old is it? Most lenders won't finance equipment older than 7 to 10 years.
- What is the fair market value? A dealer invoice, professional appraisal, or auction house valuation helps close the documentation gap.
- Is there an active resale market? Major commercial kitchen brands (Hobart, Vulcan, True Refrigeration, Manitowoc) hold value. Obscure or fully custom-built equipment often doesn't.
Buying used equipment from a closing restaurant can be a strong capital move. Just be prepared to document the equipment's age, condition, and current market value before you apply.
Equipment loan vs. equipment lease: which fits your restaurant?
| Factor | Equipment Loan | Equipment Lease |
|---|---|---|
| Ownership at end | You own it outright | Lessor owns it (buyout option common) |
| Upfront cash | 0% to 20% down | Often lower or no down payment |
| Tax treatment | Depreciation + Section 179 deduction | Lease payments may be fully deductible |
| Best for | Long-lived equipment: ranges, walk-ins | Technology and equipment you will upgrade |
| End of term | Equipment is yours free and clear | Return, renew, or buy out at residual |
For most restaurant equipment, a loan is the better long-term fit. A commercial range lasts 15 to 20 years. You want to own it. A POS system or refrigerated display that you plan to upgrade in 5 years is a stronger lease candidate.
One loan advantage worth knowing: the IRS Section 179 deduction lets businesses deduct the full purchase price of qualifying equipment in the year of purchase, up to the annual IRS limit. For a restaurant financing $100,000 to $200,000 of new equipment in a single tax year, this can mean a significant first-year deduction. The rules change annually and your specific situation determines whether it applies, so verify with your accountant before making decisions based on it.
How to build a restaurant equipment application that survives underwriting
A bank decline is not a final answer. Most restaurant owners who come to us after a bank rejection have a fixable file issue, not a fundamental disqualification. Here is what we see most often:
- Inconsistent bank statement deposits. Erratic cash flow on bank statements tells an underwriter to assume the worst. Three to six months of clean, consistent deposits before you apply does more to improve your odds than almost anything else.
- Open liens or unresolved tax issues. Outstanding tax liens and unresolved judgments are dealbreakers at most banks. Direct equipment lenders are sometimes more flexible, but you need to disclose these upfront. Surprises in underwriting kill deals.
- Debt stacking. If you already have an MCA on top of another advance, your debt-service coverage is likely buried, and lenders can see the full picture. If that is your situation, read our post on MCA consolidation and exit before taking on more debt. Adding equipment financing on top of stacked advances often makes the underlying problem worse.
- Wrong channel. A community bank that declines your equipment loan application is frequently just the wrong venue. Equipment financing through a direct lender operates with different credit models and different appetite for food service borrowers.
What you can do right now: pull your business credit report from Dun and Bradstreet or Experian Business and fix any errors before applying. Have 3 to 6 months of business bank statements ready. Know the equipment's make, model, age, and approximate value. On deals under $100,000 with a 550+ credit score, you may qualify with just the application.
For a broader look at exactly what lenders evaluate before approving any business loan, see our guide on what lenders check before they fund you.
Honest downsides to know before you apply
Equipment financing is not always the right move. We will tell you that plainly.
If the equipment is cheap enough to cash-flow in 60 to 90 days from operations, do that. The origination fees and interest on a $5,000 to $10,000 financing deal rarely make financial sense compared to just waiting one quarter.
If you are already over-leveraged, adding an equipment payment on top of existing debt service can push your margins to the point where one slow month creates a cash crisis. Lenders will likely decline you anyway if your debt-service coverage ratio is already below 1.0. The honest answer in that situation is usually to address the underlying cash flow issue first. Our post on working capital for restaurants covers the right sequence for that.
If you are in a genuine emergency and need equipment to stay open this week: fast approval options exist, but they come with higher costs. Know exactly what you are paying before you sign. Our post on same-day business funding explains what speed actually costs and when it is worth it.
One thing we see regularly: a restaurant that has been declined by a bank ends up using an MCA to cover equipment. An MCA at a 1.4 factor rate to buy a $40,000 walk-in cooler is one of the more expensive decisions we see. Equipment financing exists specifically to avoid that outcome. Apply through GrowthPath, tell us what you need, and we will tell you honestly whether we can help.
Frequently asked questions
What credit score do I need for restaurant equipment financing?
Equipment financing at GrowthPath goes down to a 550 credit score. On deals up to $100,000, same-day approvals are available with just an application. Lower scores typically require a stronger revenue file or a higher down payment. Above 650, you qualify for better terms. Above 700, you have leverage to negotiate rate and structure.
Can I finance used restaurant equipment?
Yes. Equipment financing covers new, used, and private-party purchases. Lenders want to see that the equipment has an active resale market and isn't too old (most cap at 7 to 10 years). Major commercial kitchen brands with established secondary markets are generally approvable. Be prepared to document the equipment's age, condition, and current market value.
How much of the equipment cost will the lender finance?
Most equipment financing covers 80% to 100% of the purchase price, depending on the lender and the collateral value of the equipment. Some programs require a 10% to 20% down payment on used equipment or lower-credit files. Strong-credit files on new equipment from established manufacturers can often access 100% financing.
What happens if my restaurant closes and I can't make payments?
The lender repossesses the equipment. That's the primary risk: you lose the equipment and take a credit hit. This is less severe than defaulting on a loan secured by your home, but it can disrupt operations. If you see cash trouble coming, contact the lender before you miss a payment. Many lenders will restructure payment terms rather than go through repossession.
Apply for restaurant equipment financing → See the equipment financing program