Fit-out finance: how to fund a new shop, office, clinic or kitchen

Fit-out finance is money borrowed to turn a bare tenancy into a working business, or to refresh one that’s tired. It covers the builder, the trades, the joinery and the signage, and often the equipment that goes inside. The catch is that most of what you’re paying for gets screwed, glued or wired into someone else’s building, which changes how a lender looks at it.

Understanding that one point explains almost everything about how fit-out loans are structured, why lease length matters so much, and why splitting the budget into the right pieces can make the whole project easier to fund.

Why don’t lenders lend against the fit-out itself?

With a truck or an excavator, the lender’s fallback is simple: repossess and sell. With a fit-out there’s no fallback. A custom café counter, a dental surgery’s plumbing or a retail shop’s wall shelving has little value once it’s removed, and most of it isn’t removable anyway. At the end of a lease, built-in improvements usually stay with the landlord’s building or have to be stripped out under a make-good clause.

So lenders fund fit-outs in one of three ways:

1. On cash flow. An established business with steady banked turnover can often fund a refurbishment unsecured. These facilities are typically $5k to $500k, sized on turnover and bank statements.
2. On property. Property-secured business loans from $20k to $5m, as first or second mortgages or caveat loans over residential or commercial property, suit larger projects, new businesses and fit-outs where the cash flow doesn’t yet exist.
3. Split by component. Loose equipment can be financed against itself through equipment finance, leaving only the fixed work to be funded by cash flow or property.

How do you split a fit-out budget for funding?

Splitting the quote into the right buckets is one of the most useful things you can do before you apply.

Part of the fit-out	Examples	Usual funding route
Fixed building work	Partitions, ceilings, plumbing, electrical, air-conditioning ducting, flooring	Cash-flow lending or property security
Joinery and shopfront	Counters, display units, glazing, signage	Cash-flow lending or property security
Loose equipment	Ovens, fridges, dental chairs, salon basins, computers, POS	Equipment finance, chattel mortgage or lease
Soft costs	Design, permits, certifier, project management	Usually funded with the fixed work
Contingency	A buffer for variations and surprises	Build it into the loan, not your overdraft

A café, for example, might fund its espresso machine, fridges and dishwasher through hospitality equipment finance and fund the counter, plumbing and flooring separately. Salons and clinics follow the same logic; our salon fit-out page works through a hair and beauty example.

What do lenders check before funding a fit-out?

The lease. WA’s Small Business Development Corporation warns that some businesses have spent heavily on refurbishments only to find their lease too short to recover the cost. Lenders think the same way: the loan term should finish comfortably inside the lease term.

Builder quotes. Itemised, written quotes from a licensed builder or shopfitter, ideally fixed-price, with a realistic contingency.

The payment schedule. Many lenders release funds against progress claims or invoices rather than paying the full amount upfront.

Landlord consent and contributions. Written approval for the works, plus any agreed contribution or rent-free period, which reduces what you need to borrow.

Trading figures. For an existing business, bank statements, BAS and the latest tax return. For a new one, a budget and evidence you can cover repayments while the business builds up.

When you have the quotes and the lease in hand, send us the outline of your fit-out and we’ll work out which mix of funding fits.

How are fit-outs treated at tax time?

This is where splitting the budget pays off again. The ATO lists shop fitouts and leasehold improvements as capital works, which are written off slowly over many years at a fixed statutory schedule rather than over the lease term. If the works are destroyed when the lease ends, a balancing deduction may be available in that year.

Loose equipment is different. For businesses with aggregated turnover under $10 million, the ATO’s instant asset write-off threshold is $20,000 per asset for assets first used or installed ready for use in the 2024–25 and 2025–26 income years. Your accountant will decide which items qualify, but getting the builder and supplier to invoice fixed work and loose equipment separately makes their job far easier.

Illustrative example

Illustrative example: an allied health practice is moving from a shared suite into its own ground-floor tenancy with a new seven-year lease and a five-year option. The fit-out quote comes to $310k: $190k of fixed work (partitions, plumbing to four treatment rooms, accessible bathroom, flooring and lighting), $25k of design and certification, and $95k of treatment beds, gym equipment and IT. The landlord contributes $30k and three months rent-free. The equipment is financed separately against the equipment. The fixed work and soft costs, less the landlord’s contribution, are funded by a facility sized on the practice’s two years of steady banked takings, with funds released against the builder’s progress claims.

What does fit-out finance cost?

The price depends on how it’s secured, the size of the loan, the term, your trading history and your credit file. Unsecured facilities are priced on cash flow risk; property-secured loans on the security and the loan-to-value position. Expect an establishment fee and, for property loans, legal and possibly valuation costs. Equipment finance may include a balloon or residual, which lowers the regular repayment but leaves a final lump sum. Compare total cost over the full term, and never let a loan run past the lease.

What fit-out mistakes cost owners the most?

• Starting work before funding is approved. Builders’ progress claims don’t wait for lenders.
• No contingency. Hidden services, asbestos or council conditions can blow out a budget quickly.
• Funding a fit-out from the overdraft. It drains the working capital you’ll need when the doors reopen. A business line of credit is a better tool for trading swings than for building work.
• Forgetting make-good. Check what the lease requires you to remove or restore when you leave.

Not sure whether your project leans secured or unsecured? The secured or unsecured check gives a quick steer.

Ready to get the builders booked?

Once the quotes are in and the lease is signed, funding is the last piece. Enquiring takes about a minute, and there’s no credit check when you first get in touch. Your details stay with us rather than being sprayed across a list of lenders, and a real person who understands how fit-outs are funded will look at your plans and phone you. Give us accurate figures for the total project and any equipment within it, so we can match the right structure first time.

See what your fit-out could qualify for →