Hospitality Finance

Access the equipment your business needs and pay for it on your terms with a finance deal through Savvy.

No obligation. It won't affect your credit score.

Last updated on April 19th, 2022 at 01:11 pm by Thomas Perrotta

Hospitality finance

Finding the money to access the equipment you need for your hospitality business can be a tricky proposition, especially if it’s still in its infancy. That’s why it’s important to know you have options when it comes to how you can obtain hospitality loans and finance, which you can explore right here with Savvy.

With flexible partners across the country, we can help you buy your equipment with a chattel mortgage or unsecured business loan, obtain a longer-term lease or even a short-term rental agreement so you don’t have to commit to the purchase. You can apply today and have access to your equipment as soon as tomorrow.

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The features and benefits of hospitality finance

Buy, lease or rent

You’ll have a range of options to choose from when it comes to financing your equipment, with finance offers also available for businesses who want to try before they buy.

Diverse available equipment range

You can get just about anything with hospitality equipment finance, from coffee machines to commercial stoves to industrial dishwashers and refrigerators; the choice is yours.

Enjoy tax benefits

GST, depreciation and repayment interest are all claimable with a chattel mortgage, while leasing agreements can allow you to claim up to 100% of your monthly payments.

No required deposit

You don’t need to put up a significant lump sum deposit when buying equipment if you don’t have the means to, with 100% commercial equipment financing available.

Optional residual payment

If you’re taking out a chattel mortgage, you don’t need to place a residual payment after your hospitality loan, with customisable balloons from 0% to 60%.

Sole traders accepted

It’s not just larger businesses that are eligible to apply for financing, as self-employed workers running smaller-scale operations on their own can also get a hand with equipment.

How Savvy can help you finance your hospitality equipment

Top tips for maximising your chances of hospitality finance approval

Display stability in your business’ revenue

Financiers will look to your business’ recent financial records when assessing your suitability for a loan or lease for the hospitality industry. They want to see a level of stability and comfort in your business’ revenue which would indicate it’s likely to be able to manage the repayments across the term of your proposed agreement. Any level of risk or doubt over whether you can do so will result in greater borrowing restrictions.

Don’t apply for more than you can afford

As mentioned, it’s crucial your business borrows, leases or rents within its means. Applying for a chattel mortgage with repayments greater than your available cashflow, for instance, will result in a swift rejection. You should plan out what you need so you can stick to a strict budget and not end up paying more than you’re required to. You can work out how much different finance deals and terms will end up costing by using our equipment finance repayment calculator.

Work on your business’ credit score

Another factor which will be closely considered by your financier is your business’ credit score. This is an indicator of your creditworthiness as a business and is primarily affected by the payment of bills. If you’ve consistently repaid your debts on time and in full throughout your time running the business, especially other business finance, your score is more likely to be strong. If you haven’t been able to do so, paying debts promptly will help increase your score.

Clear as many debts as you can

Not only will clearing debts improve your credit score, but it’ll also increase your business’ available income. This is the money you have available to work with once all your business expenses have been covered. By clearing your debts, you’re reducing the overall strain on your income and creating more breathing room between it and your finance payments. Doing so will also increase your borrowing power, as your business’ income will be able to support larger repayments.

Frequently asked hospitality finance questions

How long can my equipment be financed for?

This depends on the type of financing agreement you’re after. Chattel mortgages, in which you buy and own your equipment from the outset, can be taken out over a period of between one and seven years. Unsecured business loan repayment terms generally range from as little as three months up to five years maximum. Equipment leases usually come with one- to five-year terms, while equipment rental periods are likely to only span up to 12 months.

What’s the difference between an equipment lease and a rental agreement?

The primary difference between leases and rental agreements is that while you can decide whether or not to keep your equipment at the end of a rental term, meaning you can hand it back at its conclusion, the same isn’t true of leases. These often come with an obligation to pay the residual, meaning you’ll either have to buy it outright, sell it to cover the cost of the residual or refinance your residual and extend your lease’s term. Also, leased equipment is an item to be included as an asset on your balance sheet, which can affect your borrowing power and working capital, while rentals aren’t.

Can I finance used equipment?

Yes – we work with financiers willing and able to greenlight equipment used and new equipment. However, if your equipment is used, your financier will want to know more about it and its condition. They may place restrictions on the age of equipment you can buy or lease, such as only coming from a pre-approved list.

Am I still able to claim equipment rental payments as tax deductions?

You can – however, this won’t always be the case. It’s recommended you speak with your accountant about whether your rental agreement should be recorded as a balance sheet or off-balance sheet item, which will inform whether you’ll be able to claim its payments as tax deductions.

Can I pay out my finance agreement early?

Yes – however, doing so may incur early exit costs in some cases. Unsecured business loans often come without any penalties. If you want to complete your chattel mortgage repayments earlier, you should consider lenders who don’t charge for additional repayments. You may find that the costs associated with repaying it early outweigh the benefits of doing so, so you should always carefully consider whether it’s the best course of action for you. Terminating lease and rental agreements early will also typically come with fees, although you can purchase your item or upgrade it midway through a rental term.

How long will it take to get approved?

The process of applying for business equipment finance is a fast one, with applications able to be turned around from start to finish in a matter of days. In some cases, your finance deal can be processed and approved just 24 hours after you submit your application.

Will my chattel mortgage be secured?

Yes – all chattel mortgages are secured by the purchase of the asset under finance. As such, the equipment you decide to purchase with your hospitality industry loan will act as collateral throughout the agreement. One important aspect of this is that your lender will need it to remain in a condition to serve as collateral throughout your term, so you’ll need to insure it to protect you and your lender if it’s damaged and can no longer be sold.

Am I able to access equipment finance for my startup?

Yes – however, your financier will require you to meet several conditions as part of the application process. They look for business owners who are considered more trustworthy than others, so if you’ve run a business in the past or are currently running one, you’re more likely to be approved for your startup. Additionally, they prefer owners with asset-backing, such as owning a home or currently paying off a mortgage and may require a personal guarantee to pay off the debt as part of the agreement.