Restaurant equipment financing lets a restaurant pay for ovens, refrigeration, hoods, dishwashers and POS systems over time instead of in one payment. Canadian restaurants have six main routes: leasing, vendor financing, bank or specialist equipment financing, BDC, the Canada Small Business Financing Program, and a merchant cash advance.
The right one depends on four things: how long the restaurant has been operating, its credit history, how quickly the equipment is needed, and whether the equipment is new or used. A planned kitchen upgrade gives you time to compare offers. An emergency replacement does not.
Restaurant margins leave little room for the wrong choice. Statistics Canada reports that food services and drinking places earned a 4.1% operating profit margin in 2024. Cost of goods sold took 35.9% of expenses, and salaries, wages and benefits took another 33.6%. A walk-in cooler that fails in July has to be paid for out of what is left.
This guide explains how each option works, what each provider looks at, what each costs, and where each one fits.
Your restaurant equipment financing options compared
These routes overlap. A dealer may arrange its financing through a bank or a specialist, and BDC is itself an equipment financing provider. The table separates the routes you will meet when you shop.
| Option |
How it works |
Best for |
Main limitation |
| Equipment leasing |
You pay to use the equipment for a set term, often with an option to buy it at the end |
Equipment you expect to replace or upgrade |
You do not own the equipment during the term |
| Vendor or dealer financing |
The dealer or manufacturer finances the purchase, directly or through a partner |
Speed and a low upfront cost |
Shorter terms and less flexibility than a term loan |
| Bank or specialist equipment financing |
A bank or financing company funds the purchase and usually secures it against the equipment |
Established restaurants buying long-life equipment |
Requires financial statements and forecasts |
| BDC Equipment Loan |
Covers up to 125% of the purchase price, repaid over up to 12 years |
Restaurants with at least 12 months of revenue and a good credit record |
Not open to restaurants with under 12 months of revenue |
| Canada Small Business Financing Program |
A government-backed term loan, applied for through a financial institution |
Start-ups and existing restaurants that can qualify with a bank or credit union |
A 2% registration fee, and the institution makes the lending decision |
| Merchant cash advance |
An advance on future sales, repaid from revenue |
Urgent replacements, repairs, or cases where credit rules out other options |
Typically costs more than bank financing |
Need to replace equipment and keep your operating cash intact? See 2M7's restaurant equipment and operations funding, including who qualifies and how payments work.
How much does restaurant equipment financing cost?
There is no single rate for restaurant equipment financing in Canada. Your quote depends on the provider, your restaurant's finances, the equipment, the amount and the length of the agreement.
To compare offers fairly, ask every provider the same six questions about the same purchase:
- How much cash do I pay up front, including any deposit or down payment?
- What is each payment, and how often is it collected?
- What is the total I will pay, including all financing charges and fees?
- Is there a final payment or a buyout before I own the equipment?
- What happens if I pay the balance early?
- Do the payments change if my sales fall?
A longer term lowers each payment and raises the total you pay. A low lease payment can also leave out the buyout you need to take ownership.
| Route |
How the cost is expressed |
What to compare |
| Leasing |
Lease payments, fees and any buyout |
The full cost to use the equipment, and the full cost to own it if that is your goal |
| Vendor or dealer financing |
Interest or other financing charges set by the seller or its partner |
The financing offer against the dealer's cash price and one other quote |
| Bank, specialist or BDC financing |
Interest and fees |
Total interest, fees, your upfront contribution and the payment schedule |
| CSBFP term loan |
Fixed or floating interest, plus a 2% registration fee |
The rate you are quoted against the program's ceiling |
| Merchant cash advance |
A fixed cost of capital, set before you sign |
The amount you receive, the total you repay, and how often payments are collected |
The CSBFP is the one route with a published ceiling. The maximum floating rate is the lender's prime rate plus 3%, and the maximum fixed rate is the lender's single-family residential mortgage rate plus 3%. The registration fee is 2% of the loan. These are limits, and your own quote may be lower.
A merchant cash advance carries no interest rate, but it does carry a cost. Ask for the dollar amount you will receive and the dollar amount you will repay, in writing, before you decide.
Restaurant equipment leasing
Restaurant equipment leasing lets you use equipment for a fixed term in exchange for regular payments, without buying it at the start. Many leases include an option to purchase the equipment when the term ends.
BDC's guidance is that leasing suits equipment with a shorter lifespan or equipment that needs frequent updating, while buying suits equipment that will last. In a restaurant, that points to leasing for POS hardware and other technology, and to buying for ranges, hoods and walk-in coolers that stay in service for years.
Before you sign a lease, ask four questions. Who pays for maintenance? Can you swap the equipment during the term? What does the end-of-term buyout cost? What happens if the restaurant moves or closes?
Leasing also changes how the cost is treated at tax time. The Canada Revenue Agency lets a business deduct the lease payments incurred in the year for property used in the business. If the leased property has a total fair market value above $25,000, you and the lessor can jointly elect to treat the lease as a purchase. You would then deduct the interest portion and claim capital cost allowance on the equipment. Ask your accountant which treatment fits your restaurant.
What a lessor looks at: the equipment itself, the length of the term, and your restaurant's ability to make the payments.
Vendor and dealer financing
Vendor financing means the company selling the equipment also arranges the financing. BDC describes it as financing provided through a manufacturer's financing division or a partner financial institution.
The appeal is convenience. You choose the equipment and arrange payment in the same conversation, and BDC notes that vendor financing is fast and carries lower upfront costs.
The trade-off is flexibility. BDC describes vendor financing as shorter term and less flexible than a traditional term loan. Before you sign, compare the total you will pay against at least one other option on this page.
Ask for the equipment's cash price separately from the financing offer, so you can see what the financing itself costs. Choose the equipment first, on the model, warranty and servicing your kitchen needs. A supplier's financing offer should not decide what you buy.
What a vendor looks at: this varies by dealer and by the financing partner behind it. Ask who the actual financing provider is and what happens if you want to pay the balance early.
Bank and specialist equipment financing
Banks and specialist equipment financing companies fund the purchase of business equipment and assess both the business and the asset. According to BDC, the equipment is used as collateral most of the time, and the repayment period is matched to the equipment's lifespan.
This route suits an established restaurant buying equipment that will last. The paperwork is heavier than with a vendor. BDC lists what equipment financing providers commonly ask for:
- Financial statements for the past two years
- A monthly cash flow forecast for the rest of the current year and the following 12 months
- Background on the company, its operations and its management
- An explanation of how the equipment will increase sales, profitability or efficiency
Requirements vary with the provider and the size of the request. Ask whether the offer covers delivery and installation. Financing that covers only the equipment can leave a cash gap before the kitchen can use it.
What a bank or specialist looks at: the restaurant's financial history, its forecast, and the resale value of the equipment.
BDC equipment financing
The Business Development Bank of Canada offers an Equipment Loan for new or used equipment. Its terms are among the longest available to a Canadian restaurant:
- Financing of up to 125% of the purchase price, which leaves room for shipping and installation
- Repayment over up to 12 years
- The option to postpone capital payments for up to 24 months at the start
Eligibility is the constraint. BDC requires the business to be based in Canada, to have generated revenue for at least 12 months, and to have a good credit track record.
Postponing capital payments delays the principal. It does not remove the cost of financing, so check what the payment becomes once principal repayment starts.
What BDC looks at: revenue history of 12 months or more, and credit record. A restaurant that opened this year, or one with damaged credit, will need a different route.
Canada Small Business Financing Program
The Canada Small Business Financing Program (CSBFP) is a federal program that shares the risk of a loan with the financial institution that makes it. You apply through a bank or credit union, and that institution alone decides whether to approve the loan. Most start-ups and existing small businesses with gross revenues of $10 million or less can apply.
The program allows a business to borrow up to $1.15 million: a maximum of $1 million in term loans and $150,000 in lines of credit. Term loans can pay for new or used equipment.
The full $1 million is not available for kitchen equipment alone. The program sets a lower limit for equipment and leasehold improvements, so confirm the current figure with your financial institution before you plan a purchase around it.
The program also caps the cost. The maximum floating rate is the lender's prime rate plus 3%, and there is a registration fee of 2% of the loan.
Restaurants use this program more than any other sector. In 2024-25, accommodation and food services received $900.9 million, or 47.8% of the total value of CSBFP loans. Equipment loans made up 18.6% of the total.
What the financial institution looks at: the same things it would for any business loan, including financial statements, forecasts and credit history. The program reduces the institution's risk. It does not remove its approval process, so allow time for it.
Financing used restaurant equipment
Used restaurant equipment can be financed. BDC's Equipment Loan and CSBFP term loans both cover new or used equipment, and other providers set their own rules.
A used range or dishwasher costs less up front, which shrinks the amount you need to finance. It also gives a financing provider less security, because older equipment is worth less if it has to be resold.
Before you pay a deposit on a used purchase, ask each provider four questions:
- Is there a limit on the age or condition of the equipment you will finance?
- Do you need an appraisal, an inspection report or proof of ownership?
- Will you finance a purchase from a private seller or an auction, or only from a dealer?
- Are delivery, installation and any repairs included?
Compare the installed cost of the used unit against a new one, including warranty and servicing. A lower price helps less if the unit breaks down soon after it goes in.
If the answers rule out conventional financing, a merchant cash advance is one way to fund a used purchase, because the funding is based on your sales and not on the equipment.
Restaurant equipment financing with bad credit
Bad credit narrows your options without closing all of them. BDC notes that there is no specific credit score needed to get a business loan, and that financing can still be obtained with a suboptimal score when other factors, such as projections and collateral, are strong.
In practice, a weak credit history makes bank-delivered options harder to secure and pushes restaurants toward providers that weigh revenue more heavily. 2M7 bases approval on recent sales activity, and credit score is one factor among several.
For a full comparison of what each provider checks and what each option costs, read Bad Credit Equipment Financing in Canada.
Financing equipment for a new restaurant
A restaurant that has not opened yet, or has just opened, has fewer options because it has no revenue history to show.
| Stage |
What is realistic |
| Before opening |
Leasing, vendor financing, or a CSBFP loan through a financial institution |
| Open less than 3 months |
The same three options |
| Open 3 to 12 months |
The options above, plus a merchant cash advance from 2M7 if monthly revenue is at least $15,000 |
| Open 12 months or more |
All six options, including the BDC Equipment Loan |
Without revenue history, a provider relies on your business plan, your forecast and your personal credit. Have all three ready before you approach a lessor, a vendor or a bank.
When a merchant cash advance makes sense for restaurant equipment, and when it does not
A merchant cash advance is an advance on your restaurant's future sales. You receive a lump sum and repay it from revenue, with the total cost set before you sign. It is not secured against the equipment.
It has no interest rate, but it has a cost: a fixed amount set at the start. Compare that cost against the sales you lose each day the kitchen is down.
It makes sense when:
- The equipment has failed and the kitchen cannot run without it. A dead walk-in cooler or range costs you sales every day it is out, and a bank process measured in weeks does not help.
- The cost is a repair, an installation or a compliance fix. Conventional equipment financing is built around buying an asset, and these costs do not always qualify.
- You are buying used equipment from a private seller or an auction that an equipment financing provider will not fund.
- Your credit history or time in business rules out BDC and bank options, but your sales are steady.
It does not make sense when:
- The purchase is large, planned and long-lived. If you qualify for a BDC Equipment Loan or a CSBFP loan and can wait for approval, a term of up to 12 years will usually cost less than a merchant cash advance.
- Sales are too thin to carry the repayments. Funding tied to revenue only works if the revenue is there.
- The restaurant has been open less than 3 months or brings in under $15,000 a month. It will not qualify with 2M7.
The practical test is whether your restaurant can carry the repayments and still cover food, wages and rent. Run the numbers against a slow month, not your busiest one.
How to prepare before applying
Having the right documents ready shortens every one of these processes. What you need depends on the route.
For leasing, vendor financing, specialist financing, BDC or the CSBFP:
- A written quote or purchase agreement for the equipment
- Financial statements for the past two years
- A monthly cash flow forecast
- A short explanation of what the equipment will do for the restaurant: more covers, lower energy bills, fewer breakdowns
- Your premises lease, since a provider may want to know how long you can stay at the location
For a merchant cash advance from 2M7:
- Three months of business bank statements
- Photo ID
- A void cheque
Get two quotes for the equipment before you apply anywhere. A lower purchase price reduces the amount you finance under every option.
Then budget for the whole project: the equipment, delivery, installation and removal of the old unit.
How 2M7 funding works for restaurant equipment
2M7 Financial Solutions is a direct funder that provides merchant cash advances of $5,000 to $300,000 to Canadian businesses. Restaurants use the funding for ranges, walk-in coolers, POS systems, dining room furniture and compliance repairs.
To qualify, your restaurant needs to:
- Be located in Canada
- Have been operating for at least 3 months
- Bring in at least $15,000 a month in revenue
- Have no open bankruptcies
Meeting these minimums does not guarantee approval. 2M7 reviews each application.
Approval takes one business day, and funds arrive in your account within 24 hours of approval. No collateral is required.
You see the total cost before you sign. There is no interest, and there is no penalty for paying early. You choose between two repayment structures. Flex payments move with your daily card sales. Fixed payments stay the same unless you call 2M7 to request a lower amount when revenue drops.
2M7 has funded more than 5,000 small businesses and issued more than $650 million since 2008.
See how this applies to your kitchen on the restaurant equipment and operations funding page, or check if you qualify.
Frequently asked questions
What is restaurant equipment financing?
Restaurant equipment financing is any arrangement that lets a restaurant pay for kitchen, bar or front-of-house equipment over time. In Canada the main forms are leasing, vendor financing, bank or specialist equipment financing, a BDC Equipment Loan, a CSBFP loan and a merchant cash advance.
How much does restaurant equipment financing cost?
There is no single rate. Ask each provider for the upfront cash, the payment amount, the total you will repay and any buyout. Under the CSBFP, the floating rate cannot exceed the lender's prime rate plus 3%, and there is a 2% registration fee.
Is it better to lease or buy restaurant equipment?
Lease equipment you expect to replace or upgrade, such as POS hardware. Buy equipment that will stay in service for years, such as ranges and walk-in coolers. Check who pays for maintenance and what the buyout costs before you sign a lease.
Can I finance used restaurant equipment in Canada?
Yes. BDC's Equipment Loan and CSBFP term loans both cover new or used equipment. Other providers set their own limits on age, condition and seller, so ask before you pay a deposit.
Can I get restaurant equipment financing with bad credit?
Yes, though the options narrow. BDC notes that no specific credit score is required for a business loan. Providers that base approval on revenue, including 2M7, can fund restaurants that a bank would decline.
Can a new restaurant get equipment financing?
A restaurant with no revenue history can apply for leasing, vendor financing or a CSBFP loan, which is open to most start-ups. BDC's Equipment Loan requires 12 months of revenue. 2M7 requires 3 months in operation and $15,000 in monthly revenue.
Does the CSBFP provide $1 million for kitchen equipment?
No. The program allows up to $1 million in term loans, but a lower limit applies to equipment and leasehold improvements. Your financial institution decides the amount it will approve.
How long can I take to repay a BDC Equipment Loan?
Up to 12 years. BDC also allows capital payments to be postponed for up to 24 months at the start of the loan.
Are restaurant equipment lease payments tax deductible?
The Canada Revenue Agency lets a business deduct lease payments incurred in the year for property used in the business. Confirm how this applies to your restaurant with your accountant.
How fast can I get funding to replace broken kitchen equipment?
It depends on the route. 2M7 approves applications within one business day and deposits funds within 24 hours of approval. Bank-delivered options take longer because they require financial statements and forecasts.
Does a merchant cash advance have a cost?
Yes. It carries a fixed cost of capital in place of an interest rate. Compare the amount you receive, the total you repay and how often payments are collected before you accept an offer.
What documents do I need to apply?
For most equipment financing: an equipment quote, financial statements and a cash flow forecast. For a merchant cash advance from 2M7: three months of bank statements, photo ID and a void cheque.
Choosing the right option
Start with how much time you have. If the purchase is planned and your restaurant has at least 12 months of revenue and sound credit, begin with BDC or a CSBFP loan through your bank. The terms are the longest available.
If you are buying from a dealer and want one conversation, ask for the vendor's financing terms and compare the total cost against a second option.
If the equipment has already failed, your credit is damaged, or your restaurant is too new for BDC, look at funding that is based on your sales. Check if your restaurant qualifies with 2M7.
