Quick answer · Q.D08
Yes. Business loans commonly fund fit-outs, refurbishments, relocations and second sites — building work, joinery, electrical and plumbing, signage, furniture and equipment. Fit-outs are hard for lenders to take as security because they're attached to someone else's building, so funding is usually unsecured or property-secured. Budget a contingency, match payments to builder stages and check your lease term covers the payback period.
Key points
- Fit-outs, refurbishments, relocations and second sites are common loan purposes.
- Fit-outs make weak security, so funding is usually unsecured or property-secured.
- Build a contingency into the budget and match drawdowns to builder stages.
- Your lease should comfortably outlast the payback period.
- Typical funding
- Unsecured or property-secured
- Budget tip
- Include a contingency
- Check
- Lease term vs payback
What premises costs can a business loan fund?
Almost everything involved in getting a space ready to trade:
- Building work — walls, flooring, ceilings, shopfront.
- Services — electrical, plumbing, gas, air conditioning, exhaust.
- Joinery and fixtures — counters, shelving, kitchens, display units.
- Equipment — ovens, fridges, salon chairs, workshop machinery.
- Signage, lighting and technology — point-of-sale, security, networking.
- Relocation costs — removal, make-good at the old site, double rent during overlap.
- Working capital — stock, staff and marketing for the opening period.
Personal renovations don’t count — even if you work from home, only genuine business works qualify. See using a business loan for personal expenses.
Why is a fit-out hard to use as security?
Because it’s attached to a building you probably don’t own, and it has little value to anyone else. A lender can’t easily remove and resell custom joinery or a café’s plumbing. So fit-out funding usually relies on:
| Route | Suits |
|---|---|
| Unsecured business loan | Established businesses with strong turnover, modest fit-outs; typically $5,000 – $500,000 |
| Property-secured loan | Larger projects, second sites, newer businesses; $20,000 – $5,000,000 |
| Equipment finance for the equipment portion | Standard items like ovens, fridges or machinery |
| A mix | Equipment financed separately; building works unsecured or property-secured |
For the trade-offs, see secured or unsecured.
How do I budget a fit-out properly?
Fit-outs are famous for running over. Protect yourself:
- Get itemised quotes from builders and trades, not a single lump sum.
- Add a contingency — hidden issues in older buildings are common.
- Include fees — design, council approvals, certifications.
- Include the gap — rent, wages and stock while the site isn’t trading yet.
- Deduct landlord contributions or incentives.
- Allow for opening slowly — new sites rarely hit full trading in the first month.
business.gov.au’s financial tools, including its budget and start-up cost templates, are useful for pulling this together. If you’d like a real person to check the budget against what’s fundable, start with a quick enquiry — no credit check at that stage.
How should payments match the builder’s schedule?
Builders usually invoice in stages: deposit, milestones, practical completion. Funding should follow the same rhythm:
- A lump-sum loan paid upfront means paying interest on money sitting in the account before it’s needed.
- Staged drawdowns, where available, release funds as each stage is invoiced.
- A line of credit can cover progress payments as they fall due.
Ask about the builder’s payment schedule early, and share it with whoever arranges your finance.
Why does the lease matter to the loan?
Because the fit-out only earns while you’re in the premises. Before committing, check:
- Remaining term and options — will you be there long enough to recover the investment?
- Make-good obligations — what must you restore when you leave?
- Landlord approvals — are your planned works permitted?
- Assignment rights — can you sell the business with the lease if you want to exit?
A good rule: the loan term should end comfortably within the lease term. More on terms in how long you can borrow for.
What does a fit-out plan look like? (Illustrative example)
Illustrative only — invented business and figures.
An Adelaide café owner is moving to a larger site with a five-year lease plus options. The fit-out quote is $210,000, the landlord contributes a rent-free period, and the owner wants a buffer for the first three months of trading.
- Equipment (coffee machine, ovens, fridges) is financed separately, secured over the items.
- Building works and joinery are funded with a property-secured loan over the owner’s home, drawn in stages as the builder invoices.
- Working capital for the opening period comes from a small line of credit.
The loan term sits well within the lease, and repayments start at a level the new site can support during ramp-up.
What do lenders want to see?
- Itemised quotes and the builder’s payment schedule.
- The lease or agreement for lease.
- Current trading — bank statements from the existing site.
- A simple plan for the new or refurbished space, with expected revenue.
- Property details if property is the security.
What if the fit-out runs over budget?
It happens often enough to plan for. If the contingency is used up, you have a few options: trim the scope of non-essential items, negotiate staged payments with the builder, draw on a line of credit, or top up the loan. Topping up is easiest when the original lender knows the project and the business is already trading from the new site.
The worst option is quietly funding the overrun from money set aside for tax, wages or super — it simply moves the problem to the next BAS or payroll. Telling your finance contact early gives the most choices. If the pressure has already spread into day-to-day cash flow, covering a cash flow gap explains the tools.
Should I refurbish or relocate?
It depends on the lease, the location and the numbers. Refurbishing keeps customers and avoids moving costs; relocating can unlock a better site but carries more risk. Either way, the loan should be sized to the realistic total cost, including the slower first months. For cash flow during the transition, see covering a cash flow gap.
Build the space your business has outgrown
A well-planned fit-out can lift everything from revenue to staff morale. Enquiring doesn’t involve a credit check, your details aren’t blasted out to every lender going, and a real person helps you fund the project in step with your builder and your lease. Please include the quote total, your lease term and any property on the form, so the structure you hear fits the project from the start.
Frequently asked questions
Can a fit-out be used as security?
Rarely on its own. Fit-outs are usually fixed to a leased building and have little resale value, so lenders typically rely on the business's cash flow or on property security instead.
Can I borrow for a second location?
Yes. Opening a second site combines fit-out, equipment, stock, staff and working capital. Lenders will look at the first site's performance and your plan for the second.
Does my landlord's contribution affect the loan?
It reduces what you need to borrow. Landlord incentives, such as a fit-out contribution or rent-free period, should be included in your budget and shown to the lender.
How long should a fit-out loan run?
Within your lease term, and ideally well within it. You don't want to be repaying a fit-out after you've had to leave the premises.
Can I pay my builder in stages from the loan?
Depending on the lender and structure, funds can sometimes be drawn in stages, or a line of credit can be used for progress payments. Discuss the builder's payment schedule upfront.