Catering equipment finance: financing for hospitality businesses

Setting up or upgrading a commercial kitchen can require a significant investment in high-quality equipment, which can be a major issue in an industry where profit margins typically range from just 3% to 5%. 

Establishing a pub or bar typically incurs startup costs ranging from £100,000 to £300,000, including licensing, interior design, equipment, and initial stock. For many catering businesses, financing this equipment—whether through hospitality loans, equipment finance, or industry-specific finance leasing solutions—is essential to managing cash flow while moving quickly to service customers in style.

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Why finance catering equipment?

Financing options for catering equipment can help you spread the cost over time, giving you immediate access to the essential tools you need to serve up your dream experience without large upfront expenses. 

This approach helps you control your costs, provides more control over budgeting, and can even offer tax benefits. Financing is particularly helpful for restaurants, cafés, bars, and food trucks, where having modern, reliable equipment is vital to efficient, scalable operations.

Key benefits of catering equipment finance

When you’re dealing with a range of overheads, from utilities to rent and staffing, tying up large amounts of working capital in equipment can be a major roadblock. That’s where catering equipment finance can save the day.

1. Improved cash flow: Leasing and finance solutions let you manage monthly payments rather than covering entire equipment costs upfront, aligning your costs with your revenue and freeing cash flow for other business needs like inventory and marketing​​.
2. Flexible ownership: With leasing, you can choose flexible end-of-term options like buying the equipment, upgrading, or simply returning it. For businesses trying to grow quickly or focusing on just the equipment they need, this flexibility is invaluable​​.
3. Tax efficiency: Many financing solutions offer tax-deductible payments, which can help reduce your taxable income. This can be particularly handy for leasing arrangements, where rentals may be fully deductible against profits​​.
4. Preservation of credit lines: Financing catering equipment through specific asset finance or leasing agreements often doesn’t impact existing credit lines, allowing you to retain access to capital for emergencies or other investments​.
5. Access to premium brands: Financing allows businesses to acquire high-quality equipment from industry-leading brands like Rational, Blue Seal, and Hobart without compromising cash flow​.

What are the catering equipment finance options?

Choosing the right finance structure depends on your business needs, the equipment lifespan, and your financial strategy. Here’s an overview of the primary options:

Equipment lease

An equipment lease lets you use equipment for a set period while making regular payments. You don’t own the equipment initially, but you may have the option to buy it at the end.

• Advantages: Lower monthly payments than loans; possible tax deductions.
• Best for: Businesses needing flexibility, such as upgrading equipment every few years​​.

Hire purchase

Hire purchase agreements allow you to “hire” equipment while making payments. Once the final payment is made, ownership transfers to you.

• Advantages: You eventually own the asset, which is beneficial for long-term equipment.
• Best for: Businesses aiming for ownership and those with higher-value equipment needs​ that are intimately tied up with their business.

Operating lease

An operating lease is ideal for short-term needs, with the equipment returned to the lessor at the end of the term.

• Advantages: Lower payments as you’re only paying for the asset’s use.
• Best for: Short-term projects, pop ups, one-off jobs or rapidly changing equipment needs​​.

Comparing different equipment finance providers

Several catering equipment providers specialise in flexible finance solutions for the hospitality industry. Here’s a look at some popular choices:

1. Catering Centre

Catering Centre offers leasing options across a wide range of brands like Rational and Hobart. They aim to simplify the process with flexible terms and a quick online application process.

• Features: Full project financing (from single pieces to entire kitchens), tax-deductible rentals, and options to buy at the end.
• Ideal for: Established businesses and new ventures seeking flexibility and competitive monthly payments​.

2. Caterkwik

With competitive leasing rates, Caterkwik provides tailored financing solutions and acts as both a funder and broker.

• Features: Fixed payments, tax efficiency, tailored repayment options, and extensive support for new and established businesses.
• Ideal for: Businesses needing customised financing solutions and comprehensive service support​.

3. Buzz Catering Supplies

Buzz Catering Supplies offers leasing on all equipment over £500 with fast approvals, flexible terms, and a range of finance providers.

• Features: Same-day approval, lease terms from 1-5 years, and options across all business types.
• Ideal for: Fast-growing businesses needing quick access to high-quality equipment​.

Alternatives to catering equipment finance

Costs, conditions and consumer trends can change quickly in hospitality, as diners and drinkers respond to broader market conditions and competition in the industry. That’s why it’s so important for hospitality businesses to think holistically about their cash flow, ensuring they have not only finance for their equipment needs, but the flexibility to cover payroll, licensing and premises costs, as well as any unexpected expenses. 

For hospitality businesses in need of flexible finance, iwoca’s Flexi-Loan is designed to give SMEs the ability to meet their costs across a range of needs, with maximum control and agility. 

• Flexible funding: iwoca offers business loans from £1,000 up to £1 million, allowing businesses to finance all aspects of their setup, from equipment to other working capital needs. Draw down just what you need and only pay interest on what you use.
• Streamlined application: With quick online applications and funding in as little as 24 hours, iwoca makes it easy to get the cash you need quickly and painlessly.
• Customisable terms: Flexible loan terms up to 60 months offer control over repayment structures, with the ability to overpay or repay early with no fees.

Find out more about our small business loans and check out our business loans calculator.

Catering equipment FAQs

What types of catering equipment can be financed?

Almost all commercial catering equipment can be financed, including ovens, refrigerators, food prep tools, and even custom kitchen fittings. Some providers also offer financing for smaller items or entire kitchen projects​.

Can I finance catering equipment as a new business?

Yes. Many providers work with new businesses, though they may have specific requirements, like a solid business plan or additional financial documentation​​.

How does leasing differ from buying outright?

Leasing spreads costs over time, preserving cash flow and often offering tax benefits. At the end of a lease, you may have the option to buy the equipment, upgrade it, or return it, depending on your agreement​.

Is leasing tax-efficient?

Yes, leasing can be tax-efficient as payments are typically deductible against profits. This reduces taxable income, especially beneficial for businesses seeking cost-effective financial solutions​.

How quickly can I get approved for catering equipment finance?

Some providers offer same-day decisions, while others may take a few days depending on the application process and amount requested. iwoca, for example, offers rapid approvals for businesses needing fast access to funds​.

Sources

• What is the Average Restaurant Profit Margin in the UK?
• Ultimate Restaurant Costs Breakdown Guide

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