Restaurant Equipment Financing

What Equipment Qualifies

Standard restaurant equipment financing covers:

**Cooking equipment:** ovens, ranges, fryers, charbroilers, griddles, woks, salamanders, combi ovens, conveyor pizza ovens, deck ovens.

**Refrigeration:** walk-in coolers/freezers, reach-in fridges, prep tables, ice machines, blast chillers.

**Ventilation:** hoods, exhaust fans, make-up air units, fire suppression systems.

**Smallwares + dishwashing:** commercial dishwashers, undercounter glass washers, three-compartment sinks.

**Beverage:** espresso machines, beverage refrigerators, frozen drink machines, kegerators.

**Specialty:** pizza dough mixers, sushi conveyors, ramen broth kettles, smokers, taquero rotisseries.

**Build-out items (typically SBA 504 territory):** HVAC, plumbing rough-in, electrical, flooring, hood ductwork, fire suppression installation. These are bundled with equipment in a 504 deal when total project >$500K and includes real estate.

Six Financing Structures Compared

**1. Equipment loan:** Own at signing. 80-100% advance rate. 5-7 yr term. ~9-12% rate. Section 179 + bonus eligible. Best for established operators with strong tax position.

**2. $1 buyout lease (capital lease):** Lessor holds title during term; lessee pays $1 at end to take ownership. Tax-equivalent to a loan. Used when lessor has tax-position advantage that produces lower effective rate for borrower.

**3. FMV operating lease:** True lease. End-of-term option to buy at fair market value, return, or renew. Lease payments deductible as rent. Equipment OFF balance sheet. Best when restaurant plans to refresh equipment in 3-5 years (common for casual-dining concepts).

**4. SBA 504:** Best when combined with real estate. 50% bank + 40% CDC + 10% borrower. 25-yr term on real estate, 10-yr on equipment. CDC portion at 5.50-6.50% fixed. Total project >$500K. Standard for new restaurant build-outs that include the building.

**5. Vendor financing:** Equipment dealer (Restaurant Depot, Webstaurant Store, KaTom) offers in-house financing through finance partners (De Lage Landen, US Bank Equipment Finance). Promotional 0% APR for 6-24 months on qualified borrowers. After promo, rate jumps to 18-24%. Works for borrowers who pay off during promo; trap for those who don't.

**6. Captive financing:** Equipment manufacturer's finance arm (Hobart Service, Vulcan / Wolf factory financing, Manitowoc Capital). Promotional pricing on specific brand inventory. Faster approval; brand-locked.

Typical Restaurant Equipment Deal Sizes

**Quick-service / fast-casual new build:** $150K-$300K equipment (cooking + refrigeration + smallwares). SBA 7(a) covers + working capital + first 6 months payroll buffer.

**Full-service casual dining new build:** $300K-$700K equipment (full kitchen + bar). SBA 7(a) up to $5M including build-out + lease deposit + working capital.

**Fine dining new build:** $500K-$1.5M equipment (specialty cooking, walk-ins, wine storage, espresso). SBA 7(a) + sometimes mezzanine for chef-equity participation.

**Coffee shop / espresso bar:** $50K-$150K equipment. Equipment loan or vendor financing through Espresso Resource / La Marzocco.

**Multi-unit replacement / refresh:** $25K-$75K per location for equipment refresh. Equipment loan or FMV lease for refresh-friendly tax structure.

**Ghost kitchen / dark kitchen:** $50K-$150K equipment. Equipment loan, sometimes combined with delivery-platform financing partnerships.

**Food truck:** $40K-$120K equipment + truck. SBA Express ($500K cap) or specialty food-truck finance companies (Roaming Hunger, M&R Trailers Capital).

Section 179 + Bonus Depreciation Strategy (2026)

Under OBBBA 2026, restaurant operators can immediately expense up to $2.56M of qualifying equipment in year 1. Above the cap, 100% bonus depreciation applies to remaining basis. Combined: most kitchen build-outs up to ~$4M can be fully expensed.

**Example: $300K kitchen build-out.** - Section 179 deduction: $300K (full) - Federal tax savings @ 21% C-corp rate: $63K - After-tax cost of equipment: $237K - Effectively: equipment financed at $300K, but tax shield reduces real outlay materially

**Practical 2026 timing:** Equipment must be placed in service (operational, not just delivered) by Dec 31, 2026 to claim that tax year. For Q4 2026 purchases, ensure delivery + commissioning happens before year-end. Q1 2027 deliveries = 2027 tax year.

**Tax structure intersection:** Section 179 has business income limitation — you can't generate a net operating loss with Section 179 alone. Bonus depreciation has NO income limit and can drive NOL for carryforward. Combine: Section 179 first up to your taxable income, then bonus depreciation on the remaining basis to drive NOL if desired.

When to Use SBA 504 vs Equipment Loan vs Lease

**Choose SBA 504 if:** total project >$500K, you're buying or building the real estate, you want longest-term cheap financing, you can wait 60-90 days to close.

**Choose conventional equipment loan if:** pure equipment purchase, no real estate component, deal under $500K, time-sensitive close, you have strong tax position to leverage Section 179.

**Choose $1 buyout lease if:** lessor offers materially better rate than loan due to their tax position, you want loan-equivalent ownership without the bank's documentation overhead.

**Choose FMV operating lease if:** equipment will be refreshed within 5 years, off-balance-sheet treatment helps your covenants/ratios, lease payments are deductible as rent (not depreciation).

**Choose vendor / captive if:** promotional 0% APR is available AND you can pay off during promo, OR the manufacturer's captive offers materially below-market pricing for brand loyalty.

For PeerSense engagement on restaurant equipment financing: we run all six structures through our specialty equipment lender network + our SBA 7(a) PLP lenders simultaneously. Most operators get 3-4 indicative quotes within 48-72 hours. No retainer; lender pays at closing on the structure you select.