Restaurant Equipment Loans: Qualifying and Comparing

An equipment loan leaves you owning the asset from day one, which is the right structure for equipment with a long service life. Qualifying turns mostly on time in business and personal credit, and the most common reason for a decline is being under two years old rather than anything about the equipment.

How an equipment loan differs from a general business loan

The equipment secures the loan, so the lender's exposure is lower than on unsecured working capital. That usually means easier approval, longer terms and lower cost than a general-purpose business loan of the same size.

You own the equipment from the start. It appears on your balance sheet, you carry the maintenance obligation, and you keep whatever residual value it has at the end.

Because the asset is the security, the lender will often finance a percentage of its value rather than the full purchase price. A down payment between ten and twenty percent is common, and a larger one usually improves the terms.

What actually determines approval

Time in business does most of the work. Two years is a widely used threshold. Under that, you are looking at startup-friendly lenders who will price the risk accordingly.

Personal credit is weighted heavily for independent restaurants because the business has little or no credit history of its own. Most of these agreements carry a personal guarantee.

Revenue and bank statements establish that the payment is serviceable. Lenders look at average balances and at how often the account goes negative, which matters more than the headline revenue number.

The equipment itself is assessed for resale value. New equipment from a known manufacturer is straightforward. Heavily used or specialised equipment is harder, because it is harder to sell.

Reading a quote so you can compare it

Equipment finance is quoted inconsistently. Some lenders give an annual percentage rate, some give a factor rate, and many lead with a monthly payment. These cannot be compared to each other as presented.

A factor rate is a multiplier on the amount borrowed, not an annual rate. Multiply it out to get the total repayment, then compare that total against other offers over the same term. A factor rate and an annual rate that look similar as numbers are usually very different in cost.

Reduce every offer to: total repaid over the term, all fees included, and the term length. Two numbers and a duration. If a lender will not put those in writing, that is a meaningful signal.

If you are declined

A decline from one equipment lender says little about the next. Underwriting appetites differ substantially, particularly on time in business and on used equipment.

Practical things that change the answer: a larger down payment, a shorter term, financing less equipment in the first round, or adding a co-guarantor. Each reduces the lender's exposure.

Applying to many lenders at once can result in multiple credit inquiries. Ask whether an application is a soft pull before submitting it, and space out the hard pulls.

Compare financing offers

Tell us what you are buying and we will pass your details to a lending partner who works in this category. They contact you with terms. There is no cost to you and no obligation.

Common questions

What credit score is needed for a restaurant equipment loan?

It varies widely by lender and no single threshold applies across the market. Personal credit is weighted heavily for independent restaurants because the business itself often has little credit history. Ask each lender directly what their minimum is before applying.

How long are restaurant equipment loan terms?

Terms are generally matched to the expected service life of the equipment. Longer terms lower the monthly payment and raise the total cost.

Is a down payment required?

Often yes, commonly in the ten to twenty percent range, though some lenders finance the full amount for stronger applicants. A larger down payment usually improves the terms offered.

Sources

Loans, U.S. Small Business Administration. Retrieved 2026-08-15.
What is a credit inquiry?, Consumer Financial Protection Bureau. Retrieved 2026-08-15.

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Restaurant Equipment Loans: Qualifying and Comparing Offers