Skymont Lenders, a small-business funding service in Rexburg, ID, explains how restaurants finance commercial kitchen equipment. Ranges, fryers and refrigeration can go through equipment financing, point-of-sale hardware may be leased, and installation may be treated separately. Keeping equipment off the line of credit leaves room for food and payroll.
Start With an Itemized List
Before talking to anyone about restaurant financing, write the list: each item, new or used, the price, and whether it is installed or freestanding. Partners finance equipment against its value, so a single lump sum for "the kitchen" is harder to fund than a list.
- Cooking line: ranges, griddles, fryers, ovens
- Ventilation: hood and fire suppression
- Refrigeration: reach-ins, walk-in cooler or freezer, ice machine
- Cleaning: dish machine, three-compartment sink
- Front of house: point-of-sale terminals, kitchen display screens
New vs Used Kitchen Equipment
Used equipment can lower the purchase price. A partner may finance it and look closely at age, condition and resale value, and may want a dealer invoice instead of a private sale. A used fryer is easy to replace if it fails; a used walk-in compressor is a bigger risk. Spend the inspection effort where a breakdown would close the kitchen.
Installed Items: Hoods and Walk-Ins
A hood or walk-in cooler is part equipment, part construction. Once installed, it is hard to remove, which a partner may weigh as collateral. Some partners finance the unit as equipment and the installation as a soft cost; others treat the whole job as a build-out under a term loan. Ask for the quote split between equipment and labor so either structure can be used.
Installation that changes plumbing, electrical or the roof usually involves permits. The Rexburg, ID permit checklist lists what to ask the city.
Leasing the Point-of-Sale System
POS terminals can become outdated and may be bundled with software and card processing. Leasing can make sense here even when the rest of the kitchen is bought. Read whether the lease ties you to a processor, and what it costs to leave.
Keep Working Capital Free
The mistake to avoid: buying equipment out of the cash or the line of credit that covers food and payroll. A restaurant that pays for a hypothetical $30,000 hood from its operating account may then struggle to make the next two payrolls. Finance long-lived equipment over its life through equipment financing, and keep working capital for the daily cycle.
Replacing Equipment That Fails Mid-Service
Not every purchase is planned. When a walk-in compressor or a fryer fails, the restaurant loses sales every day it waits. Urgency can push an owner toward the first offer that arrives, which could be a merchant cash advance. Even under pressure, ask an equipment funder for a quote and compare the total with the advance's specified amount, including a used replacement financed as equipment against an advance covering a new one.
A Worked Example (Hypothetical)
A counter-service restaurant opening in Rexburg, ID prices its kitchen at $118,000: $64,000 cooking line and refrigeration (half of it used), $26,000 hood and suppression installed, $12,000 dish and sinks, $16,000 POS and screens. One plan: finance the line and refrigeration as equipment, fold the hood into a build-out term loan, lease the POS, and keep cash for opening inventory and payroll. Figures are invented; nothing here is an offer.
Questions to Ask an Equipment Funder
- Do you finance used equipment and private-party sales?
- Can installation and delivery be included?
- Who owns the equipment at the end, and is there a buyout?
- What does it cost to pay the equipment off ahead of schedule?
- Can more equipment be added later under the same agreement?
Kitchens Across Madison County, ID
Madison County, Idaho had 66 restaurant and other eating-place employers in 2023, 38 of them limited-service (County Business Patterns 2023). 15.8% of limited-service restaurants had fewer than five employees. The restaurant page covers the rest of a kitchen's funding options, and the Rexburg, ID page has county figures.
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By Skymont Lenders · Updated