Whether you’re starting from scratch or relocating, building your dream business or up or down-sizing you’ll need to finance your project. Here we take a look at the finance options available to fitout your space, the benefits of each, the process to secure your finance and how long the options take.
What are my options for financing my fitout?
Cash is possibly the simplest option for financing your project, however the last few months with COVID has shown how volatile the market is and how quickly things can change, so a reserve or cash asset is a good safety net, so therefore may not be the best option for financing your fitout. A fitout loan instead could be a good option to keep capital for future business expenses, such as lead generation marketing activity or staff expansion. One of the options listed below could suit you or even a hybrid of using some of your cash plus a loan so that you have a float available to you and you can minimise debt.
- Operating Lease/Rent to buy
This is a fully secured loan and is secured against the items in your fitout, such as fixtures, fittings and equipment. Typically you can borrow up to 30% of the soft cost (lights, paint) and remaining 70% of the hard costs (IT equipment, cabinetry, machinery, chattels). This loan type is purposely designed for servicing your fitout, so much of the conditions and eligibility are built around your fitout design and build. Loan terms typically range from 1-5 years.
- Remortgage or partial remortgage
In this lending scenario you are using your property or real estate to secure the loan, so although the rates and repayments can be the cheapest you can get, the loan and agreement needs to be structured professionally with full consideration to legal and tax issues, as you are considering both commercial and residential legislation, rates and terms which need professional guidance and recommendations.
- Unsecured or semi-secured
Here you may be eligible to secure a fitout loan against none or some of the items in the office. Eligibility is subject to the borrowed amount, terms and your fiout project. Unsecured finance may garner a higher rate vs. secured, however with unsecured, it typically means you can pay the loan down faster and with less penalty. Loan terms are between 1-3 years.
What’s the process for financing my fitout?
- A scope of works document is completed based on your fitout, needs and financial position.
- Finance application completed and all supporting docs collated (ID, income statements etc)
- Internal analysis of best product and supplier based on the business needs and goals
- Discussion with your accountant and solicitor & builder to ensure most appropriate options are taking into consideration your holistic business goals.
- Application submitted for formal approval
- Formal Approval obtained
- Work through any outstanding conditions as well as supply final build invoices
- Settlement of funds. (into supplier accounts or borrower account pending type of product)
How long does the process take?
Timeframes for any fitout financing can vary, but as a guideline:
1. Cash – instant
2. Operating Lease: 1-2 weeks
3. Remortgage: 3 – 4 weeks
4. Unsecured: 1 week
Who can I talk to, to help me finance my fitout?
Our advice, talk to a professional like Total Commercial Finance, as they work with 50+ credit providers, including the major banks, tier 1 & 2 financiers and also private funds, with hundreds of products, to get you the best solution based on your project.
Total Commercial Finance understand the fitout process and works with our teams, so that if you have a change in design, plans, certification or approval then they can restructure your loan, which means less hassle for you and a speedier process, so you can get on with your job and into your new premises quick smart.
They also have no upfront costs and are paid on settlement by the financier freeing up your cash flow and minimising your expenditure. They are paid for successfully getting you finance.
Chat today to Total Commercial Finance on 1300 868 190 or at [email protected]