Funding a shop, clinic or office fit-out with property equity

A good fit-out can transform a business: a café that seats more people, a clinic that can see more patients, a showroom that sells better, an office that attracts staff. It’s also a significant spend that, once installed, is hard to take with you. That last point shapes how sensible it is to fund one with property equity.

How long does your lease run?

This is the first check, and it’s often the deciding one. A fit-out in leased premises is effectively an investment in someone else’s building. If the lease ends before the fit-out has paid for itself, you may be repaying a loan on improvements you can no longer use.

Before borrowing:

• Check the remaining term and any options to renew.
• Check the make-good clause. Will you have to remove the fit-out and restore the premises when you leave?
• Talk to the landlord. A longer lease, a contribution or a rent-free period may be negotiable in exchange for improving their property.

business.gov.au’s guide to choosing a business location suggests asking how much you can spend on a fit-out before you start selling, and recommends having a lawyer review lease agreements before committing. Both are worth doing before you involve property equity.

Will the fit-out earn its cost back?

Separate fit-outs that lift revenue or efficiency from those that are refreshes:

Type	Example	Typically suits borrowing?
Capacity	More seats, treatment rooms or production space	Often, if demand is there
Compliance	Accessibility or safety works required to trade	Often, as it protects revenue
Efficiency	Better layout that cuts labour or waste	Sometimes
Refresh	New paint, signage, furniture	Usually better from cash flow

A capacity fit-out with demand already waiting is a different proposition from a cosmetic update. If yours is in the first two rows, you can ask a specialist how the funding might look, with no credit check.

What should the budget include?

Fit-outs regularly run over. A realistic budget covers:

• Design and approvals, including any council or building certifier costs.
• Construction, with a contingency your builder or designer recommends.
• Equipment, ideally financed separately (see below).
• Lost trading while the works happen, and the ramp-up afterwards.
• Make-good obligations if relevant.

Borrowing for the contingency upfront, rather than going back for more mid-project, is usually calmer and cheaper.

Should equipment be financed separately?

Generally, yes. Commercial kitchens, dental chairs, gym equipment, machinery and similar items can often be financed on their own security, keeping them off the property loan. That reduces how much your home or other property carries. See equipment finance.

There’s also a tax angle worth discussing with your accountant: the ATO confirms the $20,000 instant asset write-off is permanent from 1 July 2026 for small businesses with aggregated turnover under $10 million, applied per eligible asset. How fit-out items and equipment are treated for depreciation varies, so get advice before you buy.

What if you own the premises?

If the business, or you, own the premises being fitted out, the picture improves. The fit-out adds to a building you control, there’s no lease risk, and the premises themselves may be the natural security for the loan, keeping the family home out of it. Commercial property is usually lent against more conservatively, though, so check the cushion. See choosing the property.

What exit suits a fit-out loan?

• Trading cash flow, if the fit-out lifts revenue enough to repay within a sensible period.
• Refinance into a longer-term business loan once the improved trading shows in the figures.
• Sale of an asset if one is planned anyway.

Be realistic about ramp-up. New capacity rarely fills on day one. See building your exit plan.

An illustrative example

A physiotherapy practice leases premises with eight years remaining plus an option. Demand is strong; the practice turns patients away. A fit-out adding three treatment rooms is quoted at $210,000 including contingency, with equipment financed separately. The owner borrows $210,000 against an investment property with a comfortable cushion. The exit is a refinance into a business loan after twelve months of figures showing the new rooms busy, with a fallback of repaying from the increased cash flow over a longer period. Illustrative only.

What should you ask the landlord before committing?

If the premises are leased, the landlord has a stake in your fit-out, because it improves their building. That gives you room to negotiate before you spend:

• A longer lease or further options so the fit-out has time to pay for itself.
• A landlord contribution towards base building works such as electrical, plumbing or air-conditioning upgrades.
• A rent-free or reduced-rent period while works happen and the business ramps up.
• Clarity on make-good, so you know whether you’ll be asked to remove the fit-out at the end.
• Consent for the works in writing, including any approvals the landlord needs.

Each concession reduces the amount you need to borrow or the risk that the fit-out outlives the lease. Get the agreed terms reviewed by a lawyer before signing anything, and only then finalise the funding.

Fit-out first, finance second

If your lease, your budget and your demand all check out, send a short enquiry with the fit-out cost, the lease details and the property you’d use. One specialist will look at whether property equity is the right tool. No credit check is run when you first enquire and your enquiry isn’t sent out to multiple lenders. Please be accurate about the lease term and the quote. They matter more than anything else here.

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