The best way to pay for a business fit-out

A fit-out is one of the biggest one-off spends a small business makes, and one of the hardest to finance with a single product. Part of the budget buys things a lender can value and repossess. The rest pays tradespeople to build things into a space you probably don’t own. Treat those two halves differently and the funding falls into place.

Why is a fit-out tricky to finance?

Look at a typical café or clinic fit-out budget and it splits into two groups:

• Movable equipment. Coffee machines, ovens, fridges, dental chairs, treatment beds, IT gear, furniture. These have a resale market and can secure their own finance.
• Fixed works. Design fees, demolition, joinery, plumbing, electrical, flooring, signage, council approvals. Once installed in a leased building, a lender can’t take them back.

Asset finance can cover the first group. The second needs a loan that doesn’t depend on the fit-out as security.

What are the options?

Test	Equipment finance	Unsecured loan	Property-secured loan	Landlord contribution
Covers	Movable items	Fixed works, smaller budgets	Everything	Part of the works
Security	The equipment	Director guarantee	Property you own	Built into the lease
Term fit	Matches item life	Shorter	Longer	Over the lease
Paperwork	Supplier invoices	Bank statements, ID	Valuation, legal steps	Lease negotiation
Watch	Balloons	Repayments while opening	Property on the line	Higher rent or make-good terms

Our verdict on fit-out funding

Splitting wins because each part of the budget gets a structure suited to it. Equipment finance gives longer terms on the items that hold value. A separate unsecured loan covers the builder, sized to what your trading can comfortably carry.

The runner-up is one property-secured loan, and for owners with equity it’s often the simpler choice, especially for larger projects. One application, one set of documents, one repayment, and usually a longer term than unsecured lending allows. The trade-off is putting property on the line for a fit-out in someone else’s building.

Our head-to-head on secured versus unsecured lending goes through that trade-off in detail. If you’d like the options ranked for you, try the Loan Finder or ask a specialist about your fit-out.

Illustrative example: an allied health clinic’s second site

Illustrative only. A physiotherapy practice with five years of trading signs a lease on a second site. The fit-out quote covers treatment rooms, a reception area, plumbing and electrical, plus new treatment tables, a gym area and IT.

The owners finance the tables, gym equipment and IT through equipment finance, with terms that match their expected life. The builder’s work goes on an unsecured loan with a term well inside the five-year lease. They keep a few months of running costs in the bank, because the new clinic will take time to fill its appointment book.

Verdict for these owners: split funding, with opening working capital set aside.

What should be in your fit-out plan before you borrow?

The business.gov.au guide to applying for a business loan recommends understanding your financial position and working out the maximum repayment you can afford before you approach a lender. For a fit-out, that means:

1. Firm quotes, not estimates, for both the works and the equipment.
2. A payment schedule from the builder, so you know when money is needed.
3. A contingency for overruns.
4. Opening working capital for rent, wages and stock before the new space is trading at full strength.
5. The lease term and any options, so no loan outlasts your right to be there.

Ask the landlord about a fit-out contribution or rent-free period as well. It won’t suit everyone, but it can reduce how much you need to borrow.

For the equipment side, read the best way to fund business equipment. If you own property and are weighing whether to use it, our page on the best loan when you own property sets out the pros and cons.

What do fit-out lenders typically ask for?

• Quotes from the builder and equipment suppliers.
• The lease, including term, options and make-good clauses.
• Trading history: statements and, for larger amounts, financial statements.
• For a new site, your plan for how it will trade and how long it will take to build up.
• Security details, if property is being offered.

Fit-outs are easier to fund when the budget is firm and the lease outlasts the loan. Getting those two right before you apply makes the rest of the process smoother.

Ready to start the build?

Get your quotes together, then tell us what the fit-out involves. A specialist will help you work out which parts suit which structure, and what the whole package costs in dollars.

Asking doesn’t involve a credit check, your enquiry isn’t shopped around a crowd of lenders, and clear figures on the quotes, the lease and your trading history mean we can give you a straight answer from the start.