Asset Finance for Kitchen Equipment: The Options

Commercial kitchen equipment represents one of the largest capital outlays for hospitality businesses, yet most venues cannot afford to pay cash upfront without affecting their ability to manage day-to-day operations.

Asset finance allows you to acquire ovens, refrigeration units, dishwashers, prep tables, and other essential items while spreading the cost across fixed monthly repayments. This approach preserves working capital and allows you to upgrade or expand your kitchen capacity when your business needs it, rather than when your bank balance permits it.

Why Hospitality Equipment Finance Differs From Standard Business Loans

Hospitality equipment finance structures the loan around the equipment itself as collateral. The repayment terms typically align with the useful life of the asset, which for most commercial kitchen equipment ranges from three to seven years. This differs from unsecured business lending, where the loan sits against your general business creditworthiness rather than a specific asset.

Consider a cafe expanding its menu to include baked goods. The owner needs a commercial-grade convection oven, proofer, and mixer, totalling around $45,000. Rather than drawing down on existing credit facilities or delaying the menu expansion, the owner applies for equipment finance with the kitchen equipment serving as security. The lender assesses the equipment value and the business cashflow, then structures repayments across five years. The cafe launches its bakery offer within weeks, generating additional revenue that covers the repayments while the existing working capital remains untouched for wages, stock, and unexpected repairs.

Chattel Mortgage and Hire Purchase: The Two Core Structures

A chattel mortgage treats the kitchen equipment as security while you own it from day one. You claim depreciation and GST input credits immediately, then make regular repayments that include interest. This structure suits profitable businesses looking to maximise tax benefits.

Hire purchase means the lender owns the equipment until the final payment. You use the equipment throughout the term, claim a tax deduction on each repayment, and take ownership once the agreement concludes. Businesses with variable income or those wanting to defer ownership often prefer this approach.

Both options offer fixed monthly repayments, which allows you to forecast costs accurately. Some agreements include a balloon payment at the end, reducing the monthly commitment but requiring a larger final sum or refinancing when the term expires.

GST Treatment and Depreciation: How the Tax Position Works

When purchasing kitchen equipment under a chattel mortgage, the business claims the GST input credit on the full purchase price upfront, provided you are registered for GST. This means a $50,000 equipment purchase includes $4,545 in GST that returns to your business in the next activity statement. The equipment depreciates over its effective life, and you claim that depreciation as a tax deduction each year.

Under hire purchase, you claim a tax deduction on each repayment amount rather than depreciating the asset. The GST treatment differs as well, with credits claimed progressively on each payment rather than upfront. The choice between structures depends on your current tax position, cashflow patterns, and whether immediate deductions or deferred ownership serves your business better.

Vendor Finance and Dealer Finance: When the Supplier Arranges Funding

Many commercial kitchen equipment suppliers maintain relationships with finance providers and offer in-house arrangements. Vendor finance can accelerate the approval process since the supplier already knows the equipment specifications and resale values. The application often happens at the point of purchase, reducing the administrative steps.

Dealer finance works similarly but may involve a wider panel of lenders. The supplier acts as an intermediary, gathering your financial information and submitting it to multiple providers. While this offers convenience, the rates and terms vary significantly between lenders, and the supplier may receive a commission that influences which option they recommend. Securing your own business loan or finance arrangement before approaching suppliers puts you in a stronger negotiating position on the equipment price itself.

Upgrading Existing Equipment: How Refinancing Works Mid-Cycle

Kitchen technology and efficiency standards shift quickly. A refrigeration system installed five years ago may still function but costs significantly more to run than current models. If you financed the original equipment and still owe money, you can refinance the remaining balance and the cost of new equipment into a single agreement.

In a scenario like this, a restaurant still owes $15,000 on its existing coolroom with two years remaining. The business wants to replace the unit with a more efficient model costing $40,000. Rather than maintaining the old repayments and adding new ones, the owner refinances the $15,000 payout plus the $40,000 new equipment into one loan. The term resets, the monthly commitment increases slightly, but the energy savings offset most of that rise. The business avoids splitting repayments across multiple agreements and reduces the administrative burden.

Loan Amount and Collateral: What Lenders Assess

Lenders typically finance between 80% and 100% of the equipment value, depending on the asset type and your business financials. Well-established brands with strong resale values attract higher loan-to-value ratios. Specialised or custom-built items may require a larger deposit since their secondary market is limited.

The lender reviews recent business activity statements, tax returns, and bank statements to assess cashflow. They want evidence that your revenue comfortably covers the proposed repayments with a buffer for seasonal variation. If you operate a business with strong summer trade but quiet winter months, demonstrating consistent annual turnover matters more than peak-month figures. Some lenders allow you to offer additional collateral such as work vehicles or factory machinery to strengthen the application if the kitchen equipment alone does not provide sufficient security.

Preserving Capital for Business Growth

Deploying all available capital into kitchen equipment leaves nothing for marketing, staff training, menu development, or unexpected repairs. Asset finance keeps that capital accessible. Your business pays for the equipment from the revenue it generates rather than from reserves that could fund expansion.

This becomes particularly relevant when opening a second location or adding a function space. The upfront equipment outlay for a new kitchen can easily exceed $100,000. Financing that equipment means you retain capital for fit-out, initial stock, and operating expenses during the establishment phase. The repayments scale with your revenue growth rather than draining resources before the new venture proves itself.

Secure Me Finance works with businesses across the hospitality sector to structure asset finance that aligns with operational needs and growth plans. Whether you need a single piece of equipment or a complete kitchen fitout, we access asset finance options from banks and lenders across Australia. Call one of our team or book an appointment at a time that works for you.

Frequently Asked Questions