Fit-out finance: funding the space your customers walk into

A fit-out turns an empty shell into a shop, café, office or clinic that customers want to walk into. It’s also one of the hardest purchases to fund, because most of what you’re paying for gets screwed, glued or plumbed into someone else’s building. Fit-out finance works differently from equipment finance for exactly that reason.

What does a fit-out usually include?

• Structure: partitions, ceilings, shopfront glazing, accessible bathrooms.
• Services: electrical, data cabling, plumbing, air-conditioning, fire services.
• Finishes: flooring, paint, tiling, lighting.
• Joinery: counters, shelving, display units, reception desks, kitchen cabinetry.
• Signage and branding inside and out.
• Loose items: furniture, racks, display fridges, equipment.

Why is fit-out funding different?

Financiers that lend against equipment want something they can take back and sell. Most of a fit-out fails that test:

Fit-out item	Could a lender resell it?	Typical funding
Joinery and counters	Rarely	Business loan
Partitions, ceilings, flooring	No	Business loan
Air-conditioning units	Partly	Business loan or equipment finance
Display fridges, coffee machine	Yes	Equipment finance or business loan
Furniture	Some	Business loan

So most fit-outs are funded with an unsecured business loan for smaller projects, or a property-backed loan for larger ones. Where the fit-out includes a full commercial kitchen, see commercial kitchen equipment finance for the parts that can be treated separately.

How do you size a fit-out loan sensibly?

1. Get proper quotes from a builder or shopfitter, itemised.
2. Add a contingency. Fit-outs commonly run over; 10 to 15 per cent is a sensible buffer.
3. Subtract any landlord contribution. Ask before signing the lease, not after.
4. Split essentials from extras. What do you need to open? What can wait three months?
5. Check the lease term. The loan should be paid off before the lease ends.

Illustrative example. An Adelaide physiotherapist is moving into a vacant 140 square metre tenancy on a five-year lease. The quoted fit-out, with four treatment rooms, a gym area and reception, is about $180,000. The landlord agrees to a $30,000 contribution and three months rent-free. The physio stages the gym equipment until month four, borrows $135,000 including a contingency, and sets a four-year term so the loan is cleared a year before the lease ends.

What should you sort out before you start?

• The lease. Make-good obligations, the term, options to renew and who owns the fit-out at the end.
• Council and building approvals. Change of use, signage permits and fire compliance can add time.
• Trades and timeline. A delayed opening means rent and loan repayments without income.
• Working capital. The fit-out is only half the opening budget. Stock, wages and marketing need cash too.

How do you keep a fit-out from swallowing the business?

• Choose durable, simple finishes over designer pieces for the first fit-out.
• Buy good second-hand furniture and fixtures where they won’t be noticed.
• Open with what you need, then upgrade from profits.
• Don’t let the builder’s finance offer decide your structure for you; compare it.

Use the purchase payback calculator to see how a fit-out stacks up against the extra revenue the space will bring.

What happens to the fit-out when the lease ends?

Read the lease before you design the fit-out. Many commercial leases include make-good clauses that require you to return the space to its original condition when you leave. That can mean paying to remove the very fit-out you financed. Before committing:

• Ask what make-good requires, and whether the landlord will accept the fit-out staying.
• Negotiate an option to renew, so you have time to get full value from the fit-out.
• Find out whether the landlord would buy or keep any fit-out items at the end.
• Budget for make-good costs as a future liability.

A five-year loan on a fit-out in a three-year lease with no option is a mismatch that can hurt. Getting the lease right is part of getting the funding right.

It’s also worth checking who’s responsible for maintaining fixtures like air-conditioning during the lease, since a major repair can arrive while you’re still paying off the original installation.

Fitting out a new space?

A great fit-out can lift sales from the day you open. Let’s fund it without leaving you short. Asking us doesn’t involve a credit check; that only happens if you decide to go ahead. We don’t send your details out to a long list of lenders. A real person reads your enquiry, looks at the quotes and the lease, and calls you with options.

Please be accurate about the total quote, your lease term and any landlord contribution so the first option we suggest fits. Start your fit-out enquiry.