This guide walks you through how café equipment finance works, compares the four main finance options available in Australia, explains where Buddy’s rental model fits, and outlines what to expect during the approval process, repayments, and end-of-term options.
Cafe equipment finance funds commercial gear over a fixed term so you pay weekly or monthly instead of upfront. The four common products are rental (also called operating lease), chattel mortgage, hire purchase, and equipment lease. Buddy Capital runs a rental model with weekly payments, no upfront cost (subject to approval), terms from 12 months to 5 years, and choice of buy-out, upgrade, or hand-back at the end.
Rental (operating lease)
You pay a periodic rental for the use of the equipment. The financier owns the asset for the term. At the end you have options: buy it for a residual, upgrade to newer gear and start a fresh term, extend the rental, or hand it back. Buddy’s rental product sits here, with weekly payments and flexibility on term length.
Best when: you want zero upfront, cash flow alignment to weekly takings, and the option to upgrade later. Most common product for cafe coffee equipment.
Chattel mortgage
You take ownership of the equipment on day one. The financier holds security over the asset until the loan is paid out. You typically pay a deposit, then monthly repayments. Interest and depreciation are separate line items in your accounts.
Best when: you have cash for a deposit, want the asset on your balance sheet from day one, and you’re confident you’ll keep the equipment past the loan term.
Hire purchase
You hire the equipment with a contracted right to own it at the end. Payments are typically monthly. The financier owns it during the term and ownership transfers on the final payment. Treated similarly to a chattel mortgage in your accounts.
Best when: you want to own at the end but prefer to pay through use rather than upfront. Less common in cafe finance than rental or chattel.
Finance lease
A longer-term lease where you take the equipment for most of its useful life. You pay rentals and there’s typically a residual payment to buy at the end. Sits between operating lease and hire purchase.
Best when: you want to own at the end, you don’t want to commit a deposit, and you’re happy with monthly payments over a longer term.
Buddy runs a rental (operating lease) product with weekly payments. That structure works for cafe and roaster operators because it aligns payment cadence to takings, removes the upfront cash hurdle on a new build, and keeps the upgrade option open through the term.
The model isn’t right for everyone. An owner-operator with cash and a 10-year plan for the same machine is usually better off on a chattel mortgage or buying outright. A multi-site operator running expensive long-life equipment may find a finance lease structure suits better. The rental model wins when cash flow flexibility and end-of-term optionality are worth more to you than balance sheet ownership.
Most cafe finance gets quoted weekly because cafe revenue runs daily. A $200 weekly rental against a Wednesday-to-Sunday cafe with a $1,200 weekly coffee gross margin is easier to feel than a $880 monthly hit landing on the 15th.
The maths is the same either way. Weekly payments are just monthly payments divided by 4.33. You don’t pay more or less because of the cadence. You feel the cost differently.
If you run your bookkeeping monthly and your accountant prefers a monthly direct debit, ask. Most financiers including Buddy can quote either way.
For a new cafe build, expect to provide:
– Quote from the equipment supplier (Sanremo, La Marzocco, Brewtech, Faema, or your dealer’s quote on whatever spec)
– Business details (ABN, entity structure, shareholders or directors)
– Lease or premises confirmation (or fit-out timeline if you’re pre-lease)
– A short cash flow story: projected weekly revenue, expected takings ramp, prior hospitality experience if any
– Personal details for the operator or guarantor (ID, basic credit check consent)
For an established operator upgrading:
– Quote
– Business details
– Recent trading information (often just bank statements or BAS, sometimes nothing if the deal is small)
You typically don’t need full financial statements for deals under common thresholds.
Buddy has no formal trading-history requirement. Approval timelines are same-day quote, 48 hours for a clean deal, 3 to 5 business days for complex deals.
Setup: New build, 2-group La Marzocco Linea Classic, on-demand grinder, batch grinder, water filtration. Quote total $42,000.
Rental: 48-month term. Weekly rental around $325. Over the term, total paid lands around $67,600. End-of-term: buy-out at residual (typically 10 to 20% of original), upgrade, or hand back.
Chattel mortgage: 5-year term, 20% deposit. Deposit $8,400 upfront. Monthly repayment around $665. Total paid (deposit + repayments) around $48,300. Own the asset from day one.
Outright purchase: $42,000 cash. No finance cost. Maximum opportunity cost on the cash.
Each path has trade-offs. The cheapest option in total dollars (outright) requires the most cash. The lowest cash hurdle (rental) costs more over the term. The middle path (chattel mortgage) requires some cash and lands in the middle on total cost. Pick the trade-off that fits your cash position and growth plans, not just the cheapest sticker.
Anna’s opening her first cafe. She’s got $80,000 of fit-out budget, of which $35,000 is earmarked for coffee equipment and the rest goes to bench-work, plumbing, electrical, signage, POS, and the first two months of working capital.
If she pays the $35,000 cash for coffee gear, she leaves herself $45,000 for everything else, which her builder reckons is tight. If she rents the coffee gear at around $280/week, she keeps the $35,000 in the build budget and starts paying the rental from her opening week’s takings. Over four years she’ll pay around $58,000 in total rental, $23,000 more than outright, which is the cost of cash flow flexibility.
She picks rental. Her builder’s right about the budget being tight, and she’d rather pay the cost of finance than over-stretch the fit-out and limp through the first six months.
No. A business loan gives you cash you use however you choose. Equipment finance is secured against a specific asset and is structured as either rental or purchase finance. Rates and terms differ.
For rental products, the financier typically allows hand-back with an exit fee or remaining payment commitment depending on the agreement. For chattel mortgage and hire purchase, you’d typically sell the asset and pay out the loan balance. Read the contract for the specifics.
Yes. Buddy carries refurbished commercial coffee equipment in-house and finances both new and refurb. Refurbished pricing is typically benchmarked against a 12-month contract. Other financiers vary on their willingness to fund used equipment.
Buddy funds up to $250,000 per deal. Most cafe builds sit in the $15,000 to $60,000 range. Higher for roasteries doing wholesale fleets or multi-site operators.
A pre-approval enquiry is typically a soft check. A formal application is a hard check that does sit on your credit file. Discuss with the financier what level of check is being run before they pull it.
