Fit Out Finance: What Not to Overlook in Lisarow

Fit out finance covers the cost of turning a bare or dated commercial space into one that works for your business.

This includes partitioning, flooring, lighting, joinery, signage, kitchen or bathroom upgrades, IT cabling, and anything else you need to make the premises functional. It sits under the broader category of business asset finance, but it's structured differently to equipment loans because the improvements are fixed to a property you might not own.

For businesses setting up in Lisarow, particularly around the Parsons Road commercial strip or near the railway station where older premises often need updating, knowing how this finance works before you sign a lease makes the difference between a smooth setup and a cashflow problem three months in.

How Fit Out Finance Differs from Equipment Loans

Fit out finance is funded as a business loan or commercial hire purchase, not a chattel mortgage. The distinction matters because fit outs become part of the building, which means they can't be repossessed the way a vehicle or piece of machinery can. Lenders price that risk into the structure, and they'll often want security beyond the fit out itself, such as a director's guarantee, residential property, or a charge over other business assets.

Consider a service business relocating into a ground-floor tenancy in Lisarow. The space needs three consultation rooms, a reception area, air conditioning upgrades, and new flooring. The fit out quote comes in around $80,000. Because the improvements stay with the building, the lender will look at the lease term, the business's trading history, and what other security is available. If the lease runs for five years and the business has been operating for two, the loan term might be capped at three or four years to reduce the lender's exposure.

What Lenders Will and Won't Fund

Lenders fund permanent improvements that add functionality or value to the premises. That includes structural work, fixed joinery, flooring, ceilings, lighting, plumbing, electrical upgrades, HVAC systems, and signage. Most will also cover project management fees and design costs if they're part of a single quote.

What they won't fund is loose furniture, stock, or anything that isn't fixed to the premises. If your quote bundles desks, chairs, and filing cabinets with the partitioning and flooring, the lender will ask for a breakdown and exclude the movable items. Those can be financed separately under equipment finance, but they can't sit in the same facility as the fit out.

In our experience, the biggest issue comes when a business underwrites the total setup cost and assumes the entire amount will be approved. A café fit out might include $50,000 of fixed improvements and $20,000 of kitchen equipment. The $50,000 gets funded as fit out finance, and the $20,000 needs a separate application under a chattel mortgage or lease. If you haven't planned for that split, you're suddenly short on day one.

Lease Term and Security Requirements

Lenders won't approve a fit out loan that runs longer than the lease term. If your lease is three years with a three-year option, the initial loan term will be capped at three years unless you've already exercised the option in writing. Some lenders will consider a longer term if the landlord provides a letter confirming the option is likely to be granted, but that's not standard.

Security is the other constraint. Because the fit out can't be removed, lenders rely on the business's ability to service the debt and the value of any additional security offered. A director's guarantee is standard. If the loan is over $100,000 or the business is new, they'll usually want a second registered mortgage over residential property or a general security agreement over the business's assets. That's not always a dealbreaker, but you need to know it's coming before you commit to the lease.

How the Numbers Work in Practice

Fit out finance is priced similarly to unsecured business loans, with rates typically between 7% and 12% depending on the lender, loan size, and security offered. Terms range from one to seven years, though most sit between three and five. Repayments are structured as principal and interest, with monthly payments.

If you're financing $60,000 over four years at 9%, monthly repayments sit around $1,500. That's manageable if your lease is $2,000 a month and your revenue covers both, but it becomes a problem if you've also got equipment finance, a business overdraft, and three months of reduced trading while the fit out happens. Use the asset finance repayment calculator to model different terms and deposit amounts before you settle on a structure.

Timing and Deposit Expectations

Most lenders want a deposit between 10% and 30% of the fit out cost. If you're financing $80,000, expect to put in $8,000 to $24,000 upfront, depending on your trading history and the strength of your application. Newer businesses or those without external security will sit at the higher end of that range.

Timing is also tighter than a standard business loan. Lenders release funds in stages as the work progresses, which means your builder or fit out contractor needs to invoice incrementally and provide progress reports. If the fit out is being done by a single contractor, most lenders will release 50% upfront and 50% on completion. If it's multiple trades, they'll want a schedule of works and proof of payment before each drawdown. Build that into your timeline, because it adds a week or two to the process.

Office Refurbishment Financing for Established Businesses

If your business has been operating for more than two years and you're upgrading an existing space rather than moving, office refurbishment financing is often more straightforward. Lenders see it as lower risk because the business is already trading from the premises, and the fit out is just an improvement rather than a precondition for opening.

A professional services firm in Lisarow might refinance other business debts and roll the refurbishment cost into a single facility. That approach works well if your existing business asset finance or equipment loans are more than 12 months old and rates have shifted. The lease vs buy comparison tool can help you model whether consolidating makes sense, particularly if you're weighing up a refit against relocating entirely.

Financing IT Equipment as Part of a Fit Out

IT equipment often sits in a grey area. Cabling, wall-mounted screens, server racks, and fixed infrastructure are part of the fit out. Laptops, desktops, and portable devices aren't. If your fit out includes a full IT upgrade, split the quote early so the fixed components are captured in the fit out loan and the movable equipment is financed separately.

For businesses in Lisarow setting up for the first time, this distinction matters because the IT equipment usually arrives before the fit out is finished. If it's financed as part of the fit out loan, you won't have access to those funds until the first drawdown, which might be weeks away. Financing it separately under a chattel mortgage means the equipment is available when you need it, and the repayment structure is better suited to depreciating assets.

When Refinancing Existing Business Debt Makes Sense

If you're already carrying business debt and planning a fit out, business refinancing might be worth considering. Rolling the fit out cost into a new facility alongside existing equipment loans or a business overdraft can reduce your monthly commitments and improve cashflow, particularly if your current loans were written at higher rates.

We regularly see this with businesses that have been operating for three to five years and are upgrading premises as part of a growth phase. The existing debt was necessary to get started, but the structure no longer fits the business's cashflow or the way it operates. A refinance business loan that consolidates everything into a single repayment with a longer term can free up $1,000 to $2,000 a month, which often covers the fit out cost without adding pressure.

If you're setting up a business in Lisarow or refitting a space you're already in, call one of our team or book an appointment at a time that works for you. We work with lenders across the Coast who understand how fit out finance is structured, and we'll help you get the setup right before you commit to a lease or sign off on a quote.

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