Quick answer: how does restaurant equipment finance work in Australia?
Restaurant equipment finance lets hospitality businesses acquire kitchen and front-of-house assets now and pay them off over time. You select the equipment and supplier, the lender settles the invoice, and you make scheduled repayments over 1–7 years. The most common structures are:
- Chattel mortgage / hire purchase — ownership or effective ownership, optional balloon, often used for ovens, refrigeration, coffee machines.
- Finance lease — rentals with a residual value; suits assets with strong resale profiles.
- Operating lease — pay to use, then return, upgrade or extend; useful for tech and short-life items.
Choice of product affects GST and tax treatment, end-of-term options, and cash flow. Approval can be as fast as 24–72 hours when documentation is clear.
Step-by-step: from quote to settlement
- Scope the assets — e.g., combi ovens, ranges, extraction, refrigeration, dishwashers, coffee machines, POS, furniture and fitout components.
- Get supplier quotes — itemised, including delivery/installation. Private sales typically need serial numbers and condition details.
- Choose the structure — chattel mortgage, hire purchase, finance lease or operating lease based on ownership, tax and cash flow goals.
- Submit an application — basic business details, ABN/GST status, bank statements/BAS (or low-doc if eligible), supplier quote.
- Credit assessment — lenders review time in business, serviceability, credit history and asset type/age.
- Approval and documents — you receive an approval outlining term, rate, deposit/balloon or residual, fees, and conditions.
- Settlement — lender pays the supplier on invoice; you take delivery and start repayments.
- End of term — pay out or refinance a balloon (chattel/hire purchase), pay residual/upgrade (finance lease), or return/upgrade (operating lease).
Common structures and how they work
Chattel mortgage (including hire purchase)
You own (or effectively own) the equipment during the term. Repayments can include an optional balloon to reduce monthly cost. If you’re GST-registered, you may be able to claim the GST on the asset price in your next BAS. Interest and depreciation are typically tax-deductible. Works well for long-life items like ovens, refrigeration and stainless benches.
End-of-term: pay out or refinance the balloon and continue using the asset.
Finance lease
The lender owns the asset; you pay rentals and agree to a residual value consistent with ATO residual value guidance. Rentals are generally deductible, and GST is usually applied to each repayment. Useful when you want predictable costs and plan to pay the residual or upgrade at the end.
Operating lease
A “pay-to-use” model with options to return, extend or upgrade. Often used for short-life or technology-heavy gear like POS, smallwares bundles or coffee equipment under service arrangements.
Typical terms, deposits and residuals
- Terms: commonly 24–60 months; shorter for older/soft assets, up to 72–84 months for stronger profiles and long-life gear.
- Deposits: 0–20% depending on credit strength, time in business, and asset. Many established venues can qualify for no-deposit finance.
- Balloon/residual: optional on chattel/hire purchase; residual required on finance lease per ATO guidance. Size depends on term, lender policy and asset resale profile.
- Repayment frequency: monthly is standard; weekly or seasonal repayments can sometimes be arranged to match trading cycles.
What lenders look for and documents you may need
Lenders focus on serviceability and the asset’s resale profile. Stronger files generally mean faster approvals and sharper pricing.
- ABN, GST status and time in business (12–24+ months helps). Startups can still be funded with additional support.
- Business bank statements and/or BAS; full financials for larger limits.
- Supplier quote or tax invoice with itemisation.
- For used/private sales: photos, serial/VIN, age/condition checks.
- Director guarantees; sometimes asset valuations for higher-risk items.
Low-doc options may be available for established operators. Startups can consider startup equipment finance pathways.
Learn more: Restaurant Equipment Finance Requirements
Costs, fees and tax/GST treatment
- Interest rate: varies by credit profile, asset type/age, term and product. See Restaurant Equipment Finance Interest Rates.
- Fees: establishment fee, documentation fee, PPSR registration; some leases include a monthly admin fee.
- GST and tax: treatment depends on structure and registration:
- GST treatment — e.g., upfront input tax credit on chattel/hire purchase vs GST on lease rentals.
- Tax benefits — interest/depreciation (loan) vs rental deductions (lease). Always confirm with your accountant.
New vs used gear, private sales and fitout items
New assets are straightforward. Many lenders also consider used equipment and private sales when age/condition are acceptable. Soft costs like delivery, install, stainless fabrication and certain fitout components can often be bundled, subject to policy.
- Used/private sales: expect condition checks and tighter terms.
- Soft assets: may require stronger credit or a portion of “hard” gear in the mix.
- Refinancing existing equipment: release cash from unencumbered assets via asset refinance.
Timeframes and how to speed things up
- Indicative approvals: often within 24–72 hours for clean, low-doc eligible files.
- Settlement: typically 1–3 business days after signed docs and supplier invoice.
- Faster path: provide clear supplier quotes, recent bank statements/BAS, and confirm delivery dates early.
More detail: Restaurant Equipment Finance Approval Process
Get help choosing the right setup
If you want a second opinion on structure selection, deposits, balloons/residuals, or how GST and tax apply to your venue, send an enquiry. Advice is tailored to Australian hospitality businesses.
Frequently asked questions
How does restaurant equipment finance work in Australia?
You choose the asset and supplier, the lender pays the supplier at settlement, and you repay over 1–7 years using a loan or lease structure. Your choice affects ownership, repayments, GST and tax treatment, and end-of-term options.
What equipment can I finance?
Most kitchen and FOH items: combi ovens, grills, range hoods, stainless benches, fridges/freezers, dishwashers, coffee machines and grinders, ice machines, POS/IT, furniture and some fitout components.
Do I need a deposit?
Not always. Many established ABNs can secure no-deposit terms. Others benefit from 5–20% down depending on credit, time in business, and asset type. See deposit requirements.
Can used or private sale items be financed?
Often yes. Expect checks on age, condition and serials. Older gear may shorten the term or change the product used. Private sales typically need a detailed vendor invoice and proof of ownership.
How is GST handled?
It depends on structure and GST registration. Loans (chattel/hire purchase) may allow an upfront input tax credit on the asset price; leases typically apply GST to each repayment. See our GST treatment guide.
What about balloons and residuals?
Loans can include an optional balloon to lower repayments. Finance leases use a residual guided by ATO percentages for the term and asset type. Learn more in balloon and residuals explained.
How fast can I be approved?
Clean, well-documented files can receive indicative approval within 24–72 hours. See the approval process for tips to speed things up.
Final takeaway
Restaurant equipment finance works best when the structure matches your venue’s cash flow, ownership goals and tax position. Decide first how you want to end the term (own, upgrade or return), then choose the structure that gets you there smoothly.
If you’re comparing options, we can outline trade-offs between loans and leases, deposit vs no-deposit, and balloon/residual sizing — so your kitchen upgrade is practical on day one and sustainable over the term.