Quick answer
Fit-out finance funds the work and equipment needed to set up or refresh business premises. Movable items such as furniture, kitchen and medical equipment can often be funded with equipment finance, while building works such as partitions, plumbing and electrical usually need a term loan, secured loan or savings. Match the finance term to the lease, negotiate landlord contributions and budget for make-good costs at the end.
Key points
- Split the fit-out into movable equipment and fixed building works.
- Movable items suit equipment finance; fixed works usually need other funding.
- The finance term should sit inside the lease term.
- Landlord contributions and rent-free periods reduce borrowing.
Checklist
- Itemised quote split into equipment and works
- Lease term, options and make-good reviewed
- Landlord contribution negotiated
- Contingency budgeted
- Finance term inside the lease
A good fit-out can transform a business: a café that feels inviting, a clinic that runs efficiently, a shop that sells. It is also a large upfront cost that does not resell easily. Financing it well starts with understanding what you are actually paying for, because different parts of a fit-out suit different kinds of finance.
Split the fit-out into two parts
| Part | Examples | Typical finance |
|---|---|---|
| Movable equipment | Furniture, appliances, kitchen and medical equipment, POS systems, shelving | Equipment finance or leasing |
| Fixed building works | Partitions, plumbing, electrical, flooring, joinery, air conditioning ducts | Term loan, secured loan, savings or landlord contribution |
Lenders are generally comfortable financing movable items because they can be recovered and resold if needed. Fixed works stay with the building, so they offer little security and are usually funded another way. Ask your fitter for an itemised quote that clearly separates the two parts.
Match the term to the lease
A fit-out is only useful while you occupy the premises. If the lease, including options you are confident of exercising, ends before the finance does, you could be paying for a fit-out you no longer use. Lenders will look at the remaining lease term, and so should you.
Negotiate with the landlord
Landlords sometimes contribute to fit-outs or offer rent-free periods, particularly for longer leases or premises that have been vacant. A contribution reduces what you need to borrow. Also check:
- who owns the fit-out during and after the lease;
- make-good obligations at the end;
- whether the landlord needs to approve plans and contractors.
Budget for the full cost
Fit-outs regularly run over. Budget for design, approvals, the works, equipment, signage, IT, a contingency for unexpected items and the time the business is not trading during works. Our guide to expansion finance covers the ramp-up period after opening.
Make-good at the end
Make-good clauses can require you to remove the fit-out and restore the premises. That can be expensive and is often forgotten. Read the lease and set aside funds over its term.
Tax treatment
Different parts of a fit-out can be treated differently for tax: some equipment depreciates, some building works fall under capital works deductions, and concessions such as the instant asset write-off may apply to eligible assets under current rules. Ask your accountant early; the ATO’s depreciation guidance is a starting point.
Finance options at a glance
- Equipment finance or leasing for movable items.
- Unsecured term loan for smaller fixed works.
- Secured business loan against property for larger projects.
- Franchise packages where a franchisor arranges fit-out finance; compare with independent options. See our franchise finance review.
Industry notes
Hospitality and medical fit-outs tend to be expensive because of plumbing, ventilation, infection control and compliance. Our hospitality and medical and dental industry guides cover sector-specific points.
Common fit-out mistakes
- Treating the whole fit-out as equipment for finance purposes.
- Financing beyond the lease term.
- Ignoring make-good costs.
- Underbudgeting contingency and downtime.
- Starting works before the landlord approves plans.
An illustrative example
A made-up dental practice fits out a new clinic. Its quote separates chairs, imaging and sterilisation equipment from partitions, plumbing and cabinetry. The equipment is financed with a chattel mortgage, the landlord contributes part of the works in return for a longer lease, and the balance is funded with a term loan matched to the lease. A contingency covers an unexpected electrical upgrade.
Choosing and managing contractors
The contractor you choose affects cost, timing and quality, and therefore your finance. Get several itemised quotes, check licences and insurance, ask for references from similar fit-outs and agree a payment schedule tied to completed stages rather than large upfront deposits. Variations during works are a common source of overruns; agree how they will be priced and approved before work starts. A clear contract protects both your budget and your lender’s confidence.
Timing the finance with the works
Equipment finance usually settles when the equipment is delivered and invoiced. Term loans may be drawn in one amount or in stages. Align drawdowns with the contractor’s payment schedule so you are not paying interest on money sitting idle, and so payments are available when each stage is due. Tell your lender the expected timeline upfront.
Refreshing an existing fit-out
A refresh is often cheaper than a full fit-out and can be staged to keep trading. Prioritise changes that customers notice or that improve efficiency, and finance only what will genuinely lift revenue or cut costs.
Planning a fit-out?
If you are fitting out new premises or refreshing an existing one, make one enquiry. There is no credit check when you first enquire, a real person reviews it and your details go to one lending partner rather than many. Tell us the total budget, the equipment portion and your lease term in your enquiry.
Frequently asked questions
Can a fit-out be financed with equipment finance?
Movable items such as furniture, appliances and specialised equipment often can. Fixed building works are harder to finance as equipment because they cannot be removed and resold.
Why does the lease matter for fit-out finance?
If the lease ends before the loan, you may be repaying a fit-out you can no longer use. Lenders consider the remaining lease term carefully.
What is a landlord fit-out contribution?
An amount or rent-free period a landlord provides to help a tenant fit out premises, usually in exchange for a longer lease. It can reduce what you need to borrow.
What is make-good?
An obligation to restore the premises to an agreed condition at the end of the lease, which can involve removing the fit-out. Budget for it.
Is a fit-out tax deductible?
Different parts of a fit-out are treated differently, often through depreciation or capital works deductions. Ask your accountant.
How much contingency should I allow?
Enough to cover realistic overruns and delays. Unexpected items are common once building works start.
Can I use a secured loan for a fit-out?
Yes. Property-secured loans are often used for larger fit-outs, especially where fixed works are significant.
Can a fit-out be financed before the lease is signed?
Lenders generally want to see the signed lease, or at least agreed terms, before approving fit-out finance, because the lease term affects the risk.
Who owns the fit-out at the end of the lease?
It depends on the lease. Some fit-outs become the landlord's property, some must be removed under make-good, and some can be sold to an incoming tenant. Check the lease before you invest.
Sources and further reading
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