Equipment Financing Requirements for a New Restaurant

Equipment financing requirements for a new restaurant come down to what lenders can verify: time in business, the revenue in your bank statements, the owners' credit, and what the equipment would bring if the loan went bad. A restaurant under two years old can still finance a hood, a walk-in cooler and a cooking line, but with less history to show, projections, cash on hand and personal guarantees carry more of the load.

What do lenders require before financing equipment for a new restaurant?

Each lender writes its own credit policy, so no single minimum for time in business, revenue or credit score applies everywhere. For SBA-guaranteed loans, 13 CFR 120.150 (eCFR, current as of October 5, 2026) lets lenders consider the credit score or history of the applicant, its associates and guarantors, its earnings or cash flow, and any equity or collateral.

Some lenders publish their criteria. BDC's Small Business Loan page (checked October 6, 2026) says applicants for loans up to $100K are more likely to qualify with at least $100K in annual revenue, a personal credit score of 600 or higher, current profits and at least 24 months in business. Those criteria apply to that one Canadian product.

SOP 50 10 8.1, effective October 1, 2026, accepts a lender policy that "normally does not allow loans to new businesses (e.g., a business that has been in operation for a period of not more than 2 years)" as a reason credit isn't available elsewhere, which SBA lenders must document. A bank declining you for being too new can open the door to an SBA loan.

Why hoods and walk-in coolers are harder to finance than a range

An equipment lender's backstop is the equipment. A range or fryer can be disconnected, trucked away and resold. With a hood system or a walk-in cooler, part of what you pay for can be ductwork, roof work, refrigeration lines and labor, and that money stays in the building if the restaurant closes.

SBA's collateral rules show how steeply lenders can discount equipment. When deciding whether a Standard 7(a) loan (over $350,000) is "fully secured," SOP 50 10 8.1 counts new machinery and equipment at no more than 75% of price, used machinery at no more than 50% of net book value (80% with an orderly liquidation appraisal), and furniture and fixtures at no more than 10% of net book value or appraised value. Those percentages are SBA's caps for its fully secured test, not a rule for every loan, but they illustrate the gap between cost and collateral value. The same SOP says a loan request "must not be declined solely because collateral is inadequate," and it treats the business's cash flow as the primary source of repayment.

Used equipment lowers what you borrow but starts from a lower collateral value, and our used equipment financing rates guide covers the pricing side. Ask vendors to split hardware from installation on the quote, consider paying installation from cash, ask the lender early whether it needs your landlord's consent, and check that your lease runs at least as long as the loan.

Worked example: an 8-month-old restaurant adds a hood, walk-in and cooking line

Every number here is an assumption for illustration. A restaurant opened in February 2026. Its bank statements show average deposits of about $62,000 a month, its interim P&L shows operating cash flow (EBITDA) of about $5,000 a month, and it pays $2,300 a month on a build-out loan.

The owner puts 10% down, $8,200, and finances $73,800 under one of two structures at assumed rates:

The debt service coverage ratio (DSCR) is operating cash flow divided by debt payments. At $5,000 a month both structures clear SBA's 1.10 minimum for 7(a) Small loans. At $4,200, the five-year loan falls below it while the ten-year loan still clears, so for a young restaurant the term can matter as much as the rate, though the longer term costs roughly twice the interest.

From the lender's side, $18,000 of the $82,000 (about 22%) is installation that can't be resold. Using SBA's 75% yardstick for new equipment, the $64,000 of hardware supports about $48,000, leaving roughly $25,800 of the loan uncovered. Cash flow, the down payment, the owners' guarantees or a lien on other assets have to cover that gap.

With under a year of revenue, the restaurant is an SBA Start-Up Business, so a 7(a) Small loan needs equity of at least 10% of total project costs, which SBA defines as all costs required to become operational. If the lender counts only this package, the $8,200 down payment covers it, so ask how it will measure the project.

How SBA 7(a) treats a restaurant under two years old

SOP 50 10 8.1 defines a Start-Up Business (7(a)) as one generating revenue from intended operations for one year or less, and a New Business (7(a) and 504) as one in operation for two years or less when the loan is approved. At month 8 the example restaurant is both. Under the SOP effective October 1, 2026:

• Equity. Standard 7(a) and 7(a) Small loans to a Start-Up Business require at least 10% of total project costs. For SBA Express, requiring equity is left to the lender's business judgment.
• Repayment. 7(a) Small loans ($350,000 or less) need a DSCR of at least 1.10; with 12-month projections, the business must reach it within one year of funding. Standard 7(a) loans to start-ups and new businesses need projections showing at least 1.15 within two years of funding.
• Bank statements. For 7(a) Small loans, the lender reviews the two most recent months on your primary operating account.
• Credit and guarantees. Lenders review owners' and guarantors' personal credit reports, and anyone owning 20% or more must give an unlimited full guaranty.
• Collateral. 7(a) Small loans of $50,000 or less don't require collateral. Above that, the lender must take a first lien on the assets financed.
• Term. Equipment loans generally should not exceed 10 years, or 15 if the IRS asset class useful life supports it, plus up to 12 months when needed to finish installation.

SBA's 504 page lists long-term machinery and equipment with a useful remaining life of at least 10 years among eligible uses, and the SOP requires a New Business to contribute at least 15%.

Documents to have ready before you apply

What SBA files require, plus what private lenders commonly ask for:

• Itemized quotes with model numbers, new or used, and installation on its own line. SBA's 7(a) file list calls for a detailed listing of equipment to be bought and cost quotes where applicable.
• Business bank statements for every month since opening.
• Interim financial statements, a P&L and a balance sheet with a debt schedule. SBA requires business statements dated within 120 days of submission.
• Projections for at least 12 months, with the assumptions behind covers, average check and food cost.
• Personal financial statements for each 20% owner and guarantor, on SBA Form 413 or the lender's form, signed within 90 days.
• Your lease, which SBA asks for where one applies.
• Tax records. SBA lenders obtain IRS tax transcripts (SBA Express and Export Express lenders may do so after funding), and a business that hasn't filed required federal returns isn't eligible for SBA financing.
• Entity documents, EIN confirmation, business licenses, your health permit, and SBA Form 1919 for an SBA loan.

What to do if a lender says the restaurant is too new

A "too new" from one lender reflects its policy, and other routes stay open.

• Time the request. After 12 months of revenue, SBA's start-up equity rule stops applying, though the restaurant stays a New Business until it has operated for two years.
• Shrink the collateral gap with a larger down payment or by paying installation in cash.
• Consider leasing. Our equipment lease vs finance comparison shows how costs and end-of-term options differ.
• In Canada, the Canada Small Business Financing Program (page modified June 22, 2026) is open to small businesses or start-ups with gross annual revenues of $10 million or less, names restaurant equipment among eligible term-loan uses, requires security on equipment financed and carries a 2% registration fee paid by the borrower.
• Compare lenders. Through EQ Funding, one application for equipment financing reaches lenders who compete for the deal, each with its own time-in-business and credit criteria. EQ doesn't lend; the lenders decide.