The cost of fitting out your space and how to fund it

What Fit Out Finance Actually Covers

Fit out finance is structured lending that funds the physical transformation of a commercial space into a working business environment. It covers construction costs, fixed installations, office equipment, and the systems needed to operate from day one.

Consider a medical practice taking over a shell space in Brisbane's Fortitude Valley. The lease is signed, but the premises needs treatment rooms, reception areas, medical equipment, IT infrastructure, and compliant fixtures before a single patient walks through the door. The fit out cost hits $180,000. Rather than draining capital reserves or delaying the opening, the practice uses a fit out facility to fund the build and equipment together. The loan amount matches the project scope, with fixed monthly repayments over five years and a small balloon payment at the end to reduce the monthly obligation during the establishment phase.

Fit out finance sits alongside equipment finance and asset finance as tools that preserve working capital. The difference is timing and scope. You're not buying a single piece of machinery or a vehicle. You're funding the entire physical environment needed to operate.

How the Finance Structure Works for Fit Outs

Most fit out facilities use a chattel mortgage or hire purchase structure. The lender advances funds to cover the construction and equipment costs, and you repay over an agreed term with a fixed interest rate. The fit out becomes collateral for the loan.

A chattel mortgage gives you ownership from the start. You claim depreciation and tax benefits immediately, which matters when your accountant is managing cashflow in the first 18 months of operation. Hire purchase transfers ownership at the end of the term, which can suit different tax positions depending on your structure.

GST treatment varies by structure. With a chattel mortgage, you can often claim the GST component upfront through your Business Activity Statement, provided the fit out qualifies. With hire purchase, GST is embedded in the repayments. The difference affects how much you need to fund upfront and how quickly you recover the tax component.

The term typically runs three to seven years, depending on the asset life and how the fit out depreciates. Factory machinery or medical equipment built into the space might justify a longer term. Office equipment and furniture usually sit at the shorter end. The term affects the monthly repayment and the residual value at the end.

When Vendor or Dealer Finance Applies to Fit Outs

Vendor finance comes into play when the builder or fit out contractor offers a payment plan as part of the contract. This can look attractive because it's arranged at the point of sale, but the terms often carry a higher interest rate than you'd secure independently. Vendor finance works when speed matters more than cost, or when your business is too new to qualify for traditional lending.

Dealer finance operates the same way for equipment. If you're fitting out a commercial kitchen in one of the Fortitude Valley hospitality precincts and the supplier offers hospitality equipment finance on the ovens, fridges, and prep stations, you're dealing with dealer finance. The convenience is real, but you're often locked into one provider without the ability to compare.

In our experience, separating the construction finance from the equipment component gives you more control. You can approach the fit out builder on commercial terms and arrange your own facility to fund it, then structure the equipment separately if the tax treatment differs.

The Tax Advantage Built into Fit Out Funding

Depreciation on the fit out and equipment flows through your tax return as a deduction. The ATO allows you to write down the value of office equipment, factory machinery, and built-in fixtures over their effective life. When you fund the fit out rather than pay cash, you're claiming depreciation on an asset you still own while managing cashflow through repayments.

Tax benefits extend to the interest component of each repayment. Interest on a commercial facility used to generate income is deductible. Over a five-year term on a $150,000 fit out, that deduction adds up. Your accountant will model this against your revenue forecast, but the principle holds: funding the fit out lets you spread the tax benefit while keeping cash available for wages, stock, and operating costs during the establishment phase.

Temporary full expensing and instant asset write-off thresholds change each year, so the rules at the time of your fit out will determine whether you can claim the entire cost upfront or need to depreciate over time. Your broker can connect the timing of your settlement to the current tax treatment, but the conversation needs to happen before you sign the builder's contract.

Why Preserving Capital Matters More Than Avoiding Debt

A $200,000 fit out paid in cash leaves you with $200,000 less to cover payroll, stock orders, marketing, and the inevitable gaps between invoicing and payment. Fit out finance converts that lump sum into fixed monthly repayments, typically a fraction of your operating budget, and keeps capital available for the business needs that generate revenue.

As an example, a law firm relocating to a larger space in South Brisbane's commercial precinct needs new meeting rooms, workstations, filing systems, and technology equipment. The fit out quote is $220,000. The firm has the cash but uses it as a liquidity buffer during the move and for six months after, when client billing might be disrupted. Instead, they arrange a five-year chattel mortgage with a $20,000 balloon payment. The monthly repayment is around $3,600. That's manageable within the operating budget, and the $220,000 stays in the offset account, reducing interest on their business overdraft and available if a major client pays late or an opportunity to acquire another practice emerges.

Preserving capital isn't about avoiding spending. It's about maintaining flexibility when revenue is unpredictable or when you need to move quickly on growth.

How We Structure Fit Out Finance Across Multiple Lenders

We access asset finance options from banks and lenders across Australia. That matters because not every lender underwrites fit outs the same way. Some will fund construction costs but exclude furniture. Others will include technology equipment but cap the term. A few specialise in medical equipment finance or hospitality equipment finance and understand the depreciation schedules and industry cycles better than a general lender.

The structure depends on what you're fitting out and how you operate. A clinic using the space for ten years might suit a longer term with lower repayments. A retail tenant on a three-year lease needs a term that matches the lease so you're not paying off a fit out after you've vacated. We match the term to the business need, not the other way around.

Interest rates vary by lender, loan amount, and security offered. A fit out secured by the equipment and supported by a strong balance sheet will price lower than a startup with no trading history. If you're also arranging commercial vehicle finance or fleet finance, bundling the facilities can improve the rate. If you're upgrading existing equipment at the same time, that might sit better as a separate facility.

Call one of our team or book an appointment at a time that works for you. We'll map out what you're funding, what structure fits your tax position, and which lenders will actually write the facility for your industry and situation.

Frequently Asked Questions