An office refurbishment typically requires between $50,000 and $300,000 depending on the scale of the work.
Most business owners face a choice: draw down cash reserves, take out a business loan, or structure the project as an asset finance arrangement. Each approach has different implications for cashflow, tax treatment, and how quickly the business can access the upgraded space.
What Qualifies as Office Refurbishment Under Asset Finance
Asset finance can be used for tangible assets that retain value and can be identified separately from the building itself. This includes fitted furniture systems, partitioning, joinery, cabling infrastructure, air conditioning units, and kitchen installations. The refurbishment must create discrete items that could theoretically be removed or sold.
Structural work such as floor levelling, ceiling repairs, or general painting doesn't usually qualify because these improvements merge into the building. Lenders need collateral they can secure against, which means the financed items need to exist as identifiable equipment or fixtures.
In our experience, the line between what qualifies and what doesn't often depends on how the scope of work is documented. A fitout that includes custom joinery, glass partitions, and integrated storage systems will attract finance more readily than one focused on cosmetic updates.
Preserving Working Capital During Growth Phases
The most common reason business owners choose to finance office refurbishments is to keep cash available for operational needs. Consider a professional services firm expanding from 12 to 20 staff. The fitout costs $120,000, but the business also needs to cover recruitment, additional software licenses, and three months of payroll for the new hires before revenue increases.
Financing the fitout means the $120,000 remains in the operating account. Monthly repayments might be around $2,500 over five years, which is often more manageable than a single drawdown that leaves the business undercapitalised during a period when unexpected costs are likely.
This approach works when the refurbishment is tied to revenue growth or client-facing improvements that justify the ongoing commitment. It becomes less useful if the work is discretionary or the business already has tight margins.
Tax Deductibility and Depreciation Treatment
Asset finance structures allow business owners to claim tax deductions in different ways depending on the type of agreement. Under a chattel mortgage, the business owns the equipment and claims depreciation over the effective life of the asset, while also deducting the interest component of each repayment.
A finance lease or commercial hire purchase arrangement may allow the full repayment amount to be claimed as an operating expense, depending on how the agreement is structured and the value of any residual or balloon payment at the end of the term.
Office fitouts often include a mix of assets with different depreciation rates. Furniture might depreciate over seven years, while computer cabling infrastructure could have a shorter effective life. The structure you choose should align with how your accountant plans to treat the assets in your return, so it's worth discussing this before signing any paperwork.
Ready to get started?
Book a chat with a Finance & Mortgage Broker at Artisan Finance today.
When a Balloon Payment Makes Sense
Some equipment finance agreements include a balloon payment, which reduces the fixed monthly repayments by deferring a lump sum until the end of the term. This can be useful when the business expects a significant contract renewal, a sale, or an injection of capital within a known timeframe.
A business planning to relocate or sell within three to five years might structure the fitout finance with a 30% balloon payment. Monthly servicing costs stay lower, and the balance is settled when the business exits the premises or refinances.
The risk is that the balloon amount becomes due when circumstances have changed. If the expected capital event doesn't occur, the business may need to refinance the balloon, which can extend the commitment and increase the total cost of the arrangement.
The Case Against Financing Office Refurbishments
Not every office refurbishment should be financed. If the business has sufficient cash reserves and the work is not directly tied to revenue generation, paying outright avoids interest costs and ongoing repayment obligations.
Financing a $90,000 refurbishment over five years at a typical rate might add $15,000 to $20,000 in interest charges. For a business with stable cashflow and no immediate need for working capital, that's a cost that doesn't deliver a corresponding benefit.
Refurbishments that involve a high proportion of structural or cosmetic work also tend to be less suitable for finance, because lenders may decline the application or offer less favourable terms. If only half the project qualifies as financeable assets, the business may still need to fund the balance from cash, which reduces the cashflow advantage.
How Security and Loan Amount Affect Approval
Lenders assess office refurbishment finance based on the value and resale potential of the assets being installed. A fitout heavy on custom joinery or built-in furniture may be harder to finance than one using modular systems that could be reused or sold.
Most lenders will finance up to 80% of the invoice value for standard office equipment and fitout components. If the business has an existing relationship with the lender or can offer additional security such as property or a director's guarantee, the terms may improve.
The loan amount also matters. Applications under $50,000 are often processed quickly with minimal documentation, while larger fitouts require detailed quotes, supplier invoices, and sometimes a valuation of the installed assets. Lenders want to see that the business can service the repayments without strain, so recent financial statements and profit and loss reports are usually part of the assessment.
Fixed Monthly Repayments Versus Flexible Structures
Most asset finance agreements for office refurbishments use fixed monthly repayments, which makes budgeting straightforward. The business knows exactly what the commitment is for the full term, regardless of interest rate movements.
Some lenders offer seasonal or flexible repayment structures, where the business pays more during high-revenue periods and less during quieter months. This can suit businesses with predictable cashflow cycles, such as accounting firms or retailers, but it's less common for fitout finance than for other types of equipment.
Flexible structures usually come with slightly higher rates to compensate for the added complexity and risk to the lender. For most office refurbishments, a standard fixed repayment schedule is the most practical option.
Call one of our team or book an appointment at a time that works for you. We'll review your refurbishment scope, discuss which components qualify for finance, and structure an arrangement that aligns with your business needs and cashflow.
Frequently Asked Questions
Can I finance structural work as part of an office refurbishment?
Structural work such as floor levelling, ceiling repairs, or general painting typically doesn't qualify for asset finance because it merges into the building. Lenders need to secure against tangible assets like furniture, partitions, or equipment that can be identified and potentially removed.
What are the tax benefits of financing an office fitout?
Under a chattel mortgage, you can claim depreciation on the assets and deduct the interest portion of repayments. With a finance lease or hire purchase, the full repayment may be claimed as an operating expense, depending on the structure and any residual payment.
How much of an office refurbishment can I finance?
Most lenders will finance up to 80% of the invoice value for standard office equipment and fitout components. Higher amounts may be available if you have an existing lender relationship or can offer additional security such as property.
When should I pay cash instead of financing an office refurbishment?
Paying cash makes sense if you have sufficient reserves and the refurbishment isn't directly tied to revenue growth. Financing a typical fitout can add $15,000 to $20,000 in interest over five years, which may not be justified if working capital isn't a constraint.
What is a balloon payment and when is it useful for office fitouts?
A balloon payment defers a lump sum to the end of the finance term, reducing monthly repayments. This suits businesses expecting a capital event or sale within a known timeframe, but creates risk if that event doesn't occur and the balance needs refinancing.
