Restaurant Equipment Loans in Canada: 6 Places to Go

Are you opening a new restaurant or perhaps you want to expand operations with your existing one? If so, you know it is a time filled with many emotions ranging from excitement to overwhelm. And there are plenty of decisions to make – including how to acquire the kitchen equipment necessary to run your business. While it may not be the most glamorous part of starting a restaurant, purchasing the right equipment is key to your success. This is true whether you’re new to the restaurant business or a seasoned owner. BUT, buying everything upfront is a challenge, especially with a budget and tight cash flow. In these cases it may be beneficial for your business to consider financing as it spreads out the cost over time. This allows you to keep additional capital for other needs.

In this article we will discuss various financing options, making sure you can get the necessary equipment without straining your cash flow.

Lender	Ideal For	Key Features	Interest Rate	Terms of Repayment
“Big 5” Banks and Credit Unions	Borrowers with relatively higher credit scores	Most competitive loan terms (less interest, longer loan period), access to other financial services, flexible terms (credit unions)	Lower rates	Longer repayment period, manageable terms
Swoop Funding	Any size of business	Customizable asset-based loans, fast approval, a simplified application process, transparent fees	Higher rates	Flexible
Merchant Growth	Borrowers that have a low(er) credit score	Flexible repayment, simpler cash flow management	Higher rates	Varies, based on borrower profile
Driven.ca	Borrowers in need of quick funding	Flexible loans, straightforward approvals	Higher rates	Varies
SharpShooter Funding	Small and medium-sized businesses	Concise submission process, fast approvals	Higher rates	Possibility of flexible repayment (for a cost)
Journey Capital	Borrowers with low (or non-existent) credit	Accommodates borrowers with bad credit	Higher rates	Shorter

Why finance restaurant equipment?

Financing restaurant equipment can be a wise choice, especially if you are just starting or want to expand your business. Ideally, you want to accomplish your business goals without draining your savings, and financing can help you do just that. Instead of purchasing everything outright, it spreads out the cost of the equipment over several years. This helps preserve your working capital—money better used for day-to-day operations or emergencies.

Financing your purchase lets you keep more money in your pocket by improving your cash flow. Plus, it lets you get the latest (and greatest!) equipment without the upfront expense. By helping your restaurant stay competitive with up-to-date equipment, this approach allows you to deliver the best service to your customers. It creates the opportunity for you to invest in your business without immediate – and often significant(!) – costs.

Challenges finding financing for businesses with bad (or no) credit

Securing financing can be particularly difficult for restaurant owners with poor or no credit history. Banks often have stringent credit requirements, making it challenging to qualify for loans, so business owners with bad credit may need alternative lenders. Often, these lenders have higher interest rates combined with less favorable terms. Improving your credit score through consistent payments, consolidating existing debt, and seeking credit counseling can help. Building a strong business plan and demonstrating stable cash flow can also increase the chances of getting your loan approved. Yes, even from non-traditional lenders.

List of restaurant equipment loan options in Canada

Several options are available in Canada if you’re looking for ways to finance your restaurant equipment. Whether you are working with traditional banks (and credit unions) or alternative lending sources, it’s all about finding what’s best for your restaurant. Below, we’ve outlined some of the financing options with each catering (no pun intended) to different situations.

1.     The “Big 5” & Credit Unions

The major Canadian banks and credit unions are a great place to start if you’re looking for reliable financing options. Banks like BMO, RBC, TD, Scotiaban, CIBC and even the BDC can offer equipment loans with competitive interest rates. They are ideal if you have a solid credit history because they have lower rates & extended repayment.

Credit unions are another top-rated option, especially if you’re new to the business and need more personalized service. They offer competitive interest rates along with a community-driven approach. This can make a huge difference for small or medium-sized restaurants.

Both banks and credit unions offer predictable terms and stability. Choosing one of these lenders means you’ll have access to lower rates and a more structured loan process – this can ease the financial burden of growing your restaurant.

2.     Swoop Funding

Swoop Funding offers customized asset-based financing solutions that fit the needs of restaurant owners. They make it easy to access funds, thanks to their partnerships with various lenders, including banks. Swoop is a great alternative option for equipment funding if you need fast approval and a tailored financing solution. However, their rates may not be as good as banks.

3.    Merchant Growth

Providing flexible financing for small and medium-sized restaurants, Merchant Growth even offers loans to businesses with lower credit scores. The company is ideal for businesses needing cash fast as they have quick approvals and short-term funding. If you’re looking for a hassle-free way to secure equipment, Merchant Growth might be worth exploring. Click here for our in-depth review of this lender.

4.    Driven.ca

Driven.ca offers financing solutions specifically for small businesses that need access to funding. They pride themselves on fast and reliable financing. This lender makes it easy for restaurant owners to secure cash without a hassle thanks to their simplified application process and flexible repayment schedule.

Click here to see our thoughts on Driven.ca.

5.    SharpShooter Funding

SharpShooter Funding specializes in (small to medium-sized) business loans and offers funding for restaurant equipment. With fast approvals and varying repayment terms, the lender is a great choice if you’re looking for quick and convenient financing without a complicated process.

6.    Journey Capital

Journey Capital provides flexible financing options for businesses in the restaurant industry with no/bad credit. They emphasize customizable terms to ensure the financing meets your unique business needs. If you’re looking for an adaptable solution, this lender might be the right choice to support your restaurant’s growth. Wondering what we think of Journey Capital? Check out our review.

Comparing banks, credit unions, and alternative lenders

Choosing between lenders can make all the difference when financing restaurant equipment. Banks and credit unions both offer the best terms – typically with extended repayment options. Also, LOWER interest rates. If you have a solid credit history, these lenders are beneficial but they also have more stringent requirements. This can make qualifying a challenge (as you may know from experience).

Alternative lenders – like Swoop Funding and Merchant Growth – offer faster approval and flexible terms. These benefits have the cost of higher interest and (additional) fees. But, alternative lenders may still be ideal for those who need funding quickly and do not qualify for a conventional bank loan. Does this sound like your restaurant? If so, you can also look into an equipment-based loan.

Regardless of your situation, weigh ALL aspects, considering each option’s pros AND cons before making a decision.

The cost of alternative lenders

Alternative lenders often have higher fees and, compared to banks and credit unions, they also have inferior repayment conditions. While many alternative lenders are CLA-certified and have great reviews, their convenience comes at a premium. It is necessary for restaurant owners to evaluate the costs carefully because a higher (sometimes MUCH higher) rate of interest and additional fees can add up. Before deciding on a lender, consider if the faster approval process and flexibility are worth the increased costs.

Dealing with bad debt in the restaurant industry

It can be a real struggle to manage debt in the restaurant industry and that is without factoring in the high equipment costs and fluctuating sales. Is this you? If you’re finding it difficult to keep up with your debts, there are options to help ease the burden.

• A popular solution is debt consolidation, as it can combine your debts into ONE. By consolidating, you have one debt to worry about with a single payment instead of several.
• Consumer proposals can also be beneficial as they allow you to negotiate partial repayment to creditors. Consolidated Credit of Canada and the Credit Counselling Society can help with this. They offer free consultations to review your financial situation and offer suggestions and advice.
• Credit counselors help you create a workable repayment plan for restaurant debt.

Benefits of debt relief programs

Debt relief programs can be a lifeline for restaurant owners with overwhelming financial strain. These programs can reduce your financial burden. They can also improve cash flow, allowing you to refocus on running your restaurant smoothly.

If you have poor credit then make sure to deal with your existing debt. Do this BEFORE considering new financing! Taking on new liabilities to finance your restaurant may only make your situation worse if you have outstanding debt. This is why it is important to repay your debts first. Also, improve your credit score for better financing opportunities.

Conclusion

Should I consider financing for my restaurant? How can I fund the purchase of equipment? On top of other staffing and logistical concerns, these questions can be overwhelming but they are critical in setting up your business for success. This article covers a range of choices—from conventional institutions like banks and credit unions to alternative lenders. Each option has both benefits AND disadvantages. Though their requirements may be strict, both of these traditional lenders offer lower interest rate loans. In contrast, alternative lenders provide quicker approvals, but remember flexible terms (often) have a higher cost.

Before you commit to financing, consider your options while factoring in the interest rate of each lender. And repayment terms? They matter too. Determine the total cost over time – how much will the loan really cost you? Once you know this, you can align your financing choice with your long-term business goals as it can affect both how smoothly your restaurant runs and your business’s projected growth. Take the time to evaluate your needs and decide what best supports the success of your business.