Funding Your Restaurant Fitout Without Emptying Your Bank Account
A restaurant fitout typically costs between $150,000 and $500,000 depending on size and location, and paying that upfront leaves most operators without the cash buffer they need for staff wages, stock, and the inevitable slow weeks. Commercial equipment finance lets you spread the cost over time while preserving the working capital that keeps your business running.
Consider a Melbourne CBD operator fitting out a 120-seat venue on Little Collins Street. The kitchen equipment alone might run to $180,000, with another $90,000 for furniture, lighting, and point-of-sale systems. Rather than depleting their entire cash reserve, they structure the fitout through equipment finance that matches repayments to projected revenue once the doors open.
The advantage is immediate. You get the equipment installed and operational while keeping enough liquidity to cover the first three months of trading when cash flow is unpredictable and customer numbers are still building.
What Equipment Can You Finance in a Restaurant Fitout?
You can finance nearly every physical asset in a restaurant fitout, from commercial ovens and dishwashers to tables, chairs, and bar equipment. The structure applies to kitchen machinery, refrigeration units, ventilation systems, point-of-sale technology, and even fixed furniture that becomes part of the premises.
Lenders typically separate the fitout into categories. Hard assets like ovens, grills, and cool rooms are straightforward because they hold resale value and can serve as collateral. Soft furnishings like upholstery and decorative lighting are still financeable but may require a slightly higher deposit or be grouped with higher-value items to balance the loan amount.
For a regional operator setting up in Geelong or Bendigo, the same principles apply. A chattel mortgage works well if you're purchasing equipment outright and want to claim depreciation, while a finance lease might suit operators who plan to upgrade their kitchen technology every few years as the business grows.
How Repayment Structures Affect Your Cash Flow
Fixed monthly repayments make budgeting predictable, but the structure you choose changes how much capital you tie up and when. A chattel mortgage gives you ownership from day one, lets you claim the GST upfront, and allows you to depreciate the assets for tax purposes. You'll pay principal and interest each month, and the equipment is yours at the end of the term.
A finance lease spreads payments over the life of the lease without transferring ownership until the final payment. This can lower your monthly outgoings slightly and may offer different tax treatment depending on your business structure. The lease payments are typically fully deductible as operating expenses, which appeals to operators prioritising cash flow over asset ownership.
In our experience, restaurant operators in high-turnover areas like Chapel Street or Lygon Street often prefer ownership structures because they plan to stay in the venue long-term and want the flexibility to sell or upgrade equipment on their own schedule. Operators testing a concept or working in short-lease premises sometimes lean toward leasing to keep options open.
The Deposit Requirement and What It Covers
Most lenders ask for a deposit between 10% and 30% of the total fitout cost, depending on the equipment type and your business trading history. If you're fitting out your first venue, expect to be closer to the 30% mark. Established operators with a proven track record may secure finance with a smaller upfront contribution.
The deposit usually comes from your own savings or working capital, though some operators use a combination of vendor finance for specific equipment and a broader asset finance facility for the balance. Vendor finance can reduce the initial cash requirement if your supplier offers it, but the interest rate is often higher than what you'd get through an independent lender.
A Brunswick operator we worked with recently structured a $220,000 fitout with a 20% deposit, financing the kitchen through a chattel mortgage and the furniture through a separate agreement. That approach let them negotiate better terms with each supplier while keeping the finance structured to suit the different upgrade cycles of kitchen versus front-of-house equipment.
Tax Benefits and How to Use Them
Depreciation and immediate deductions can significantly reduce the after-tax cost of your fitout. Under a chattel mortgage, you own the equipment and can claim depreciation each year based on the asset's effective life. Most commercial kitchen equipment depreciates over seven to fifteen years, while technology like point-of-sale systems might depreciate faster.
If your business qualifies for instant asset write-off provisions, you may be able to deduct the full cost of certain equipment in the year of purchase, though thresholds and eligibility change regularly. Your accountant will help you determine what applies to your situation, but the principle is consistent: financing equipment doesn't disqualify you from claiming tax benefits as long as you structure the arrangement correctly.
Operators using a finance lease typically deduct the lease payments as an operating expense rather than claiming depreciation. Both approaches deliver tax benefits, but the cash flow impact and timing differ. A Hire Purchase agreement combines elements of both, giving you ownership at the end while treating payments as a mix of interest and principal.
Matching Finance Terms to Your Fitout Strategy
The term you choose should reflect how long you expect the equipment to stay useful and how your revenue builds over time. Kitchen equipment might justify a five-year term because a commercial oven or cool room will last a decade or more with proper maintenance. Technology and point-of-sale systems might suit a three-year term if you plan to upgrade as customer payment preferences evolve.
A longer term reduces your monthly repayments but increases the total interest paid over the life of the lease. A shorter term keeps your total cost lower but requires higher monthly commitments. For a new venue, matching the term to your cash flow projections matters more than minimising interest, because running out of liquidity in the first six months will cost you more than an extra year of repayments.
Some lenders offer a balloon payment structure where you make lower monthly repayments and settle a lump sum at the end of the term. That can help in the early stages when revenue is still building, but you need a clear plan for how you'll fund that final payment, whether through refinancing, selling the equipment, or using accumulated profit.
How to Structure Finance Across Multiple Suppliers
Restaurant fitouts usually involve multiple suppliers: a commercial kitchen provider, a furniture manufacturer, a refrigeration specialist, and an IT vendor. You can either finance each supplier separately or consolidate everything under one facility. Separate agreements give you flexibility to negotiate terms specific to each asset type, but they also mean managing multiple repayment schedules.
Consolidating through a single lender simplifies your cash flow management and often results in a better interest rate because you're financing a larger loan amount with one provider. The trade-off is that you may need to wait until all suppliers are confirmed before drawing down the full facility, which can delay installation if one supplier is slower than the others.
When working with clients across regional Victoria, we regularly see operators use a combination of working capital for upfront deposits and equipment finance for the balance. That approach keeps the finance structure aligned with the assets while ensuring you have enough liquidity to cover the gaps between orders, delivery, and installation.
Call one of our team or book an appointment at a time that works for you. We'll walk through your fitout plan, compare lenders who understand hospitality equipment, and structure the finance to match your cash flow from opening day forward.
Frequently Asked Questions
Can I finance both kitchen equipment and furniture in a restaurant fitout?
Yes, you can finance nearly every physical asset in a restaurant fitout, from commercial ovens and refrigeration to tables, chairs, and point-of-sale systems. Lenders typically group these into hard assets like kitchen machinery and soft assets like furniture, both of which are financeable.
What deposit do I need for restaurant fitout finance?
Most lenders require a deposit between 10% and 30% of the total fitout cost. New operators typically need closer to 30%, while established businesses with a proven track record may secure finance with a smaller upfront contribution.
Should I use a chattel mortgage or a finance lease for restaurant equipment?
A chattel mortgage gives you immediate ownership and lets you claim depreciation and GST upfront, while a finance lease spreads payments without transferring ownership until the end. Choose based on whether you prioritise asset ownership and tax deductions or lower monthly repayments and flexibility.
How long should the finance term be for a restaurant fitout?
Kitchen equipment typically suits a five-year term because it lasts a decade or more, while technology like point-of-sale systems might suit three years if you plan to upgrade regularly. Match the term to how long the equipment stays useful and your expected cash flow.
Can I claim tax deductions on financed restaurant equipment?
Yes, under a chattel mortgage you can claim depreciation on the equipment each year, and you may qualify for instant asset write-off provisions depending on eligibility. With a finance lease, you typically deduct the lease payments as an operating expense instead.
