Purchasing restaurant equipment outright can tie up capital that would otherwise fund stock, wages, or marketing.
Commercial kitchen fit-outs for cafes and restaurants in East Doncaster typically require between $80,000 and $200,000 in equipment, depending on whether you are opening a small cafe near Tunstall Square or a full-service restaurant along Blackburn Road. Equipment finance allows you to spread that cost across fixed monthly repayments while preserving cashflow for day-to-day operations.
What Equipment Finance Covers for Hospitality Businesses
Equipment finance is structured to fund any tangible asset used in your business. For restaurant operators, this includes commercial ovens, refrigeration units, dishwashers, espresso machines, grills, fryers, exhaust canopies, and point-of-sale systems. It also extends to furniture such as tables, chairs, and outdoor seating, as well as work vehicles like delivery vans.
Consider a cafe operator in East Doncaster upgrading from a two-group espresso machine to a three-group model with integrated grinder and water filtration. Rather than paying $25,000 upfront, equipment finance spreads the cost across 36 or 60 months, allowing the business to maintain inventory levels and cover staffing during the upgrade. The equipment itself serves as collateral, which often makes approval more straightforward than unsecured business finance.
The finance structure also accommodates fit-outs for new venues. A restaurant opening near the East Doncaster Secondary College precinct might finance an entire kitchen package, including benches, shelving, and cool rooms, under a single facility. This consolidates repayments and simplifies budgeting during the critical first months of operation.
Chattel Mortgage vs Hire Purchase: How the Structures Differ
A chattel mortgage and hire purchase are the two primary structures for equipment finance. Both are secured by the equipment, but ownership and tax treatment differ.
Under a chattel mortgage, you own the equipment from day one. The lender takes a mortgage over the asset as security. Interest and depreciation are both tax deductible, and you can claim GST on the purchase price upfront if registered for GST. This structure suits businesses with steady revenue and the ability to manage a balloon payment at the end of the term if structured that way.
Hire purchase, by contrast, treats the lender as the owner until the final payment is made. You make regular repayments that include both principal and interest, and ownership transfers at the end of the term. GST is claimed on each repayment rather than upfront. This structure works well for businesses that prefer to avoid a large balloon payment and want ownership to transfer automatically once the loan is repaid.
A restaurant operator in East Doncaster financing a $40,000 commercial oven under a chattel mortgage can claim the full GST credit at purchase, reducing the amount financed. That same operator using hire purchase would claim GST progressively over the life of the lease, but would not face a residual payment at the end.
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How to Structure Repayments Around Seasonal Revenue
Restaurants often experience revenue fluctuations tied to school terms, public holidays, and local events. Fixed monthly repayments provide certainty, but the term length and any residual payment should align with your revenue profile.
A 36-month term with no balloon payment suits businesses with consistent turnover and a preference for full ownership within three years. A 60-month term reduces the monthly commitment but extends the repayment period. Some operators include a balloon payment of 20% to 30% of the loan amount, reducing monthly repayments during the term and settling the residual either through refinancing or revenue at maturity.
In our experience, hospitality businesses near high-traffic areas like Tunstall Square or Doncaster Shoppingtown often benefit from shorter terms with higher monthly repayments, as consistent foot traffic supports stronger cashflow. Venues in quieter pockets may prefer longer terms to manage cashflow during slower periods.
Using Equipment Finance to Manage Cashflow and Tax
Equipment finance is tax deductible. Interest paid on a chattel mortgage or hire purchase is deductible as a business expense, and the equipment itself is depreciable under plant and equipment rules. This reduces your taxable income and improves after-tax cashflow.
For a restaurant financing $100,000 in kitchen equipment, the depreciation deduction and interest deduction combined can materially reduce tax liability in the first few years. The exact benefit depends on your business structure and income, but the ability to claim both components makes equipment finance more tax effective than paying cash upfront and only claiming depreciation.
Financing also preserves working capital. A cafe operator with $50,000 in savings can keep that amount available for stock, wages, and unexpected expenses rather than committing it to equipment. The cost of finance is offset by the operational flexibility and tax deductions generated over the term.
What Lenders Assess When Approving Restaurant Equipment Finance
Lenders evaluate your ability to service repayments, the quality of the equipment being financed, and your business trading history. For established restaurants, recent profit and loss statements, bank statements showing turnover, and a clear explanation of how the equipment will support revenue are typically sufficient.
For new ventures, lenders place greater weight on your business plan, deposit or equity contribution, and any relevant industry experience. A first-time restaurant owner in East Doncaster with a 20% deposit and a detailed fit-out plan is more likely to gain approval than an applicant with no hospitality background and minimal equity.
The equipment itself must hold resale value. Commercial kitchen equipment from reputable suppliers is viewed favourably because it can be recovered and sold if the loan defaults. Custom-built or highly specialised items may require a larger deposit or attract higher interest rates.
How to Apply for Equipment Finance Through Tekfin
The application process begins with identifying the equipment you need and obtaining a supplier quote. That quote should detail the equipment specification, price including GST, and delivery timeframe. If you are financing a fit-out, a full itemised quote from the shopfitter or equipment supplier is required.
You will also need recent business financials, including profit and loss statements and bank statements covering the past three to six months. If the business is new, a business plan and forecast cashflow statement take the place of trading history.
Once submitted, the lender assesses the application and provides conditional approval, often within 24 to 48 hours for established businesses. Final approval is subject to verification of the equipment and settlement occurs once the supplier is ready to deliver. The funds are typically paid directly to the supplier, and you take possession of the equipment upon delivery.
Tekfin works with a panel of lenders offering asset finance and business loans, allowing us to compare options and match the structure to your business needs. Whether you are opening a new venue or upgrading existing equipment, we can structure the finance to align with your revenue and tax position.
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Frequently Asked Questions
What types of restaurant equipment can be financed?
You can finance any tangible asset used in your hospitality business, including commercial ovens, refrigeration units, dishwashers, espresso machines, grills, fryers, exhaust canopies, point-of-sale systems, furniture, and delivery vehicles. The equipment serves as collateral, which often simplifies approval compared to unsecured finance.
What is the difference between a chattel mortgage and hire purchase?
Under a chattel mortgage, you own the equipment from day one and the lender takes security over it. You can claim GST upfront if registered and both interest and depreciation are tax deductible. With hire purchase, the lender owns the equipment until the final payment, you claim GST progressively, and ownership transfers at the end of the term.
How long does equipment finance approval take?
For established businesses with recent financials, conditional approval often occurs within 24 to 48 hours. Final approval depends on verification of the equipment and settlement typically happens once the supplier is ready to deliver, with funds paid directly to them.
Can I finance a full restaurant fit-out?
Yes, you can finance an entire kitchen package including benches, shelving, cool rooms, and other equipment under a single facility. This consolidates repayments and simplifies budgeting, particularly useful for new venues during the early months of operation.
Is equipment finance tax deductible?
Yes, interest paid on equipment finance is tax deductible as a business expense, and the equipment itself is depreciable under plant and equipment rules. This reduces your taxable income and improves after-tax cashflow compared to purchasing equipment outright with cash.
