Do you know how restaurant fitout finance works?

Setting up a restaurant requires significant capital for everything from commercial ovens to dining furniture. Asset finance allows you to spread the cost of this equipment over time while preserving the working capital you need for stock, staff wages, and the inevitable surprises that come with opening a hospitality venue.

The question most Port Kennedy restaurant owners face is whether to pay cash upfront or structure finance that keeps money available for day-to-day operations. Given that a full commercial kitchen fitout can run well into six figures, and that most new venues need at least three to six months of operating expenses on hand, finance often makes more sense than draining your business account before you've served your first customer.

How hospitality equipment finance differs from a standard business loan

The equipment itself acts as security for the loan. You're not borrowing against your home or providing a personal guarantee in most cases. The lender's interest is tied to the commercial ovens, refrigeration units, coffee machines, and other items being financed. This means approval often hinges more on the equipment's resale value and your business plan than your personal asset position.

Consider a Port Kennedy couple setting up a beachside cafe near the southern end of Safety Bay Road. They need a three-group espresso machine, commercial dishwasher, display fridges, andpoint-of-sale system. The equipment total comes to around $85,000. Rather than using all their savings, they structure a chattel mortgage over five years. They retain $60,000 in working capital for stock, wages, and marketing during the critical first six months. The monthly repayment of roughly $1,600 becomes a predictable operating expense, and they claim the full GST input credit upfront because they own the equipment from day one.

Fixed monthly repayments versus balloon payments

You'll typically choose between level repayments across the term or a structure with lower monthly payments and a lump sum due at the end. The second option reduces your monthly commitment but means you need an exit strategy when the balloon payment falls due.

A restaurant owner financing $120,000 worth of kitchen equipment might opt for a $30,000 balloon payment after five years. Monthly repayments drop from around $2,300 to $1,800. That extra $500 per month can cover an additional casual staff member during peak periods. The trade-off is that in five years, you'll need to either refinance that $30,000, pay it from cash reserves, or sell and upgrade the equipment. For venues planning to refresh their fitout within five years anyway, this structure aligns the finance term with the intended upgrade cycle.

Tax treatment and depreciation for restaurant equipment

Under a chattel mortgage, you own the equipment and can claim depreciation as a tax deduction each year. You also claim the interest portion of each repayment. For a $100,000 fitout, that often translates to $15,000 to $20,000 in depreciation in the first year, depending on the effective life of each item. Commercial refrigeration typically depreciates faster than dining furniture, so your accountant will apply different rates across the equipment schedule.

An operating lease works differently. You don't own the equipment. Instead, you lease it for an agreed term, claim the full lease payment as a tax deduction, and return it at the end or purchase it for a residual value. This structure keeps the equipment off your balance sheet, which matters if you're seeking additional funding or want to present a leaner asset base to potential investors or partners. We regularly see this approach used for technology and point-of-sale systems that need replacing every three to four years.

When vendor finance makes sense for Port Kennedy venues

Some equipment suppliers offer their own finance arrangements. You order the equipment, sign the finance agreement with the supplier's preferred lender, and the supplier gets paid in full. The appeal is speed. You can often have approval within 24 hours and equipment delivered the same week.

The limitation is that you're locked into that supplier's equipment and the lender they've partnered with. You won't have the option to compare rates or structures across multiple lenders. For smaller purchases under $20,000, the convenience might outweigh the potential cost difference. For a full fitout, it's worth comparing finance options across lenders before committing. We've seen rate differences of up to 2% depending on whether you go direct with a supplier's finance arm or arrange your own through a broker who accesses multiple lenders.

Structuring finance around your restaurant's cash flow

Most lenders allow you to defer the first repayment for 60 to 90 days. This aligns the start of your repayment obligation with the point where you're generating revenue. If your fitout takes eight weeks and you need another month to build a customer base, a 90-day deferral means your first repayment falls due when you're already trading.

You can also split the finance across different terms depending on the equipment type. Commercial kitchen equipment with a 10 to 15 year lifespan might sit on a seven-year term, while front-of-house technology on a three-year term. This avoids paying off a coffee machine over seven years when you'll likely replace it in five. The result is that your repayment term mirrors the useful life of what you're financing, and you're not still paying for equipment you've already scrapped.

How brokers access lenders outside the major banks

The major banks offer commercial equipment finance, but they're not the only option. Specialist lenders often have more flexible serviceability criteria and a deeper understanding of hospitality cash flow. A bank might want to see two years of financials. A specialist lender might approve based on a strong business plan, a lease agreement for a high-traffic location, and evidence that the equipment being financed will generate the revenue to cover repayments.

For a new venue in Port Kennedy near the foreshore, where foot traffic is seasonal and weekends drive the majority of revenue, a lender familiar with hospitality will understand that your cash flow won't look like a retail shop or professional services business. They'll assess your application with that context in mind. A broker working across multiple lenders can present your scenario to the ones most likely to approve it, rather than you applying directly and getting declined because the lender's policy doesn't stretch to startups or seasonal businesses.

Call one of our team or book an appointment at a time that works for you. We'll walk through your fitout requirements, compare finance structures, and make sure the equipment you need is funded in a way that supports your business from day one.

Frequently Asked Questions