Fit-out and refurbishment

Fit-out and refurbishment finance

A fit-out is hard to finance because most of it becomes a fixture in premises you do not own, and a lender cannot repossess a ceiling. HomeSec funds fit-outs against equity in real property instead, from $20,000 to $5,000,000, covering the works, equipment, bond and the trading months afterwards.

A cafe owner behind the counter of a small suburban shop

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The reason this is hard to finance

Almost everything in a fit-out stops being your property the moment it is installed. Glazing, joinery, plumbing, electrical, ceilings, flooring, partitioning and services attach to the building, and the building belongs to the landlord. A lender asked to take security over a fit-out is being asked to take security over improvements to somebody else's asset, in premises it has no rights to enter, under a lease that can end.

Loose equipment with a real resale market — commercial ovens, salon chairs, workshop machines — can sometimes be financed by an equipment financier on a chattel mortgage. That is worth pursuing where it applies, and it typically covers a minority of the spend. The builder, the trades and the services almost never are.

What a fit-out actually costs

Item	Usually overlooked
Design and documentation	Designer, certifier, engineering where structure or services change.
Build and trades	The visible number. Almost always the one quoted and rarely the total.
Services and compliance	Mechanical ventilation, grease traps, accessibility, fire, exhaust — commonly required by council or by the landlord.
Equipment and signage	Sometimes separately financeable, sometimes tied to approved suppliers.
Bond, deposit and outgoings	Cash out before trading starts, and a bank guarantee ties up more.
Rent during the build	Unless you negotiated a rent-free fit-out period. Ask for one.
Opening stock and wages	The months between opening and trading properly, at full fixed cost.
Make-good at the end	A future obligation to restore the premises, sometimes by stripping out what you just paid for.

Fund the last three as deliberately as the first five. A business that funds the build and not the trading months afterwards opens beautifully and runs out of money in month two, which is a depressingly common way for a good concept to fail.

Two things to negotiate before you sign the lease

The landlord's contribution. Cash incentive, rent-free period, or works done by the landlord. All three are negotiable, particularly on a longer term or in a soft market, and every dollar of contribution is a dollar you do not borrow. Your leverage is highest before you sign and roughly zero afterwards.
The make-good obligation. Have your lawyer read it and get the condition of the premises documented, with photographs, before work starts. A make-good clause that requires full restoration can cost as much at the end of a lease as a fit-out did at the start, and it is a liability the whole time you trade.

Funding it against property

Because the loan is secured by real property rather than by the works, the assessment does not depend on what the fit-out would fetch, how long the lease runs, or what the accounts looked like in the year you spent the money. Interest can be capitalised for up to six months, which lines up with the period when the premises are being built and are not yet earning. A person decides every loan. Every application is read by a Lending Manager and every credit decision is signed off by a person. We do not use artificial intelligence to assess, approve, decline or price a loan.

How much you can borrow

Take the property's value, multiply by 80% for residential security or 70% for commercial, and subtract what is already owing on it. What is left is roughly what is available, between $20,000 and $5,000,000. Several properties can be added together, and the borrower does not have to be the owner — companies, trusts and sole traders — including start-ups, with everyone on title signing. Up to 80% on residential and 70% on commercial. Lower on large acreage, and LVRs may reduce on properties worth less than $800,000.

From the call to the money

Tell us the deal

Amount, purpose, timing, the property and how the loan gets repaid. A Lending Manager gives you an indicative answer on that call — usually in minutes.

Minutes

Conditional approval

Photo ID, a rates notice and your most recent mortgage statement. That is the whole list, and it takes about fifteen minutes.

About 15 minutes

Funds released

As little as 24 hours from a clean, complete scenario. Paid where you tell us — to your account, or straight to the ATO.

As little as 24 hours

What it costs

Priced per file, on the property, the position, the amount and the exit. No rate is published, because a rate with "from" in front of it is the best file's number. How it is priced, and every fee that exists.

✓Upfront: a small commitment fee, payable only once your loan is conditionally approved

✓Valuation fee: none — we don't use valuers

✓Monthly or line fees: none — no monthly, line or account-keeping fees

✓Fee to extend: none — no rollover fees, legal fees or rewriting the loan to extend

Questions we get on the phone

Can I get finance for a shop or office fit-out?

Yes, where there is equity in Australian real property to secure it. HomeSec lends $20,000 to $5,000,000 for a business purpose, and a fit-out is a business purpose. What we do not do is lend against the fit-out itself, for the reason that makes fit-out finance hard everywhere: once installed, most of it becomes a fixture in premises you do not own.

Why will lenders not lend against a fit-out?

Because a fit-out is largely not recoverable. Shopfront glazing, joinery, plumbing, electrical, ceilings, flooring and partitioning become fixtures attached to the landlord's building. A lender cannot repossess a ceiling. Loose equipment with a resale market — ovens, chairs, machines — can sometimes be financed separately by an equipment financier, but that is usually a minority of the total spend.

Does the landlord contribute?

Often, and it is worth negotiating hard for. Landlord contributions come as a cash incentive, a rent-free period, or works completed by the landlord. All three are negotiable, particularly on a longer lease or in a soft leasing market, and they directly reduce what you need to fund. Ask before you sign, because your leverage disappears afterwards.

What is a make-good clause and why does it matter to funding?

A clause requiring you to return the premises to an agreed condition at the end of the lease — sometimes stripping out the fit-out you paid for. It is a real future cost that many tenants discover late, and it means a fit-out can cost money twice. Have your lawyer read it, and get the make-good obligation and any agreed photographic condition report clear before you start.

Can the loan cover more than the builder?

Yes. Fit-out, equipment, signage, professional fees, the lease bond, opening stock and the working capital for the first months can all be funded together. Funding the build and forgetting the trading months afterwards is the single most common mistake in this category.

My premises are leased and my business owns nothing. Can I borrow?

Yes, provided you or someone in the ownership group owns real property. The company or trust borrows and the property secures it, with everyone on the title signing.

How long should the loan run?

That is your choice — the term is open with no minimum, no maximum and no fee to extend. A sensible approach is to match it roughly to how long the fit-out takes to pay for itself, with room for it taking longer. A facility with a fixed end date on a fit-out that has not yet delivered its return is how refinancing crises begin.

Can I fund a refurbishment the landlord is requiring?

Yes, and it is a common file. A landlord or franchisor requiring works to a deadline creates a fixed-date obligation, which is exactly what funding in days rather than weeks is for.

Include the trading months in the number

Tell us the build cost and the months until it trades properly, and we will size it against both. 1300 93 83 87, Mon–Fri, 8:30am – 5:30pm Melbourne time.

Other ways businesses grow

Funding an expansion Buying a business Buying a franchise Buying equipment outright What a business is worth Releasing equity to fund it Buying commercial premises

Sixty seconds, no documents

See if you qualify in sixty seconds

Three short questions, no credit check to apply and no financial statements. A Lending Manager reads it and calls you back with a real answer — not a call centre, not an algorithm.

That's the HomeSec Advantage.

See if you qualify Call 1300 93 83 87Mon–Fri, 8:30am – 5:30pm Melbourne time

Reviewed by Matt Hempel, National Credit Manager