Fitout Finance Traps to Avoid!

  • 04 September, 2019
  • Sharon Piening

When arranging finance for the fitout of your business premises there are several Fitout Finance traps to avoid.

Fitout Finance is complex and specialised.

It is easy to make expensive mistakes, or if the Financier is not experienced in the field, waste an enormous amount of time and resources.

To help make the process easy download our free eBook – The Fitout Finance Handbook

Common Fitout Finance traps to avoid include:

Fitout Finance Trap No. 1 – The Headline Interest Rate!

Whilst cost is clearly important, focusing solely on the headline interest rate is a common Fitout Finance trap to avoid.
At times cheap headline interest rates are used to grab attention but when you drill down you find:

  • The rate is only available for shorter terms, which could potential place a severe strain on your cashflow
  • It may require additional supporting security to access the lower rate
  • The low rate is offset by other fees and charges

Like most things in life, if it sounds too good to be true, caution is required!

Fitout Finance Trap No. 2 – Not Aligned to Cashflow!

If you finance a fitout, the amount borrowed is usually amortised fully over the term of the facility.
That is, there is no residual at the end of the term.

This means repayments are higher than would be the case if there was a residual payment.

For this reason, it is important to ensure the repayments are aligned to your cashflow.

Failure to do this can lead to cashflow shortfalls and negatively impact business operations.

Fitout Finance Trap No. 3 – The Deposit

When you contract someone to undertake the fitout of your business premises, you will normally be asked to place a deposit.

Depending on the size of the fitout the amount involved can be significant which can place a strain on cashflow.

However to avoid this, you can arrange for the deposit to be reimbursed as part of the finance package.

Fitout Finance Trap No. 4 – The Wrong Product

Quickly signing up to finance to get the process underway and not ensuring you are using the right product, is another Fitout Finance trap to avoid!

Choosing the right product is important from an ownership and critically, a tax perspective.

Also, you may find that if you choose the wrong product, you cannot claim back the GST.

Fitout Finance Trap No. 5 – Supplier Finance

Just as it can be a trap to sign up to dealership finance when buying a new car, caution is needed with Supplier or Installer Finance:

  • This finance is unlikely to be tailored to your cashflow
  • A higher project cost may offset a low interest rate

Accessing our panel of specialist Fitout Financiers, provides a separation between you and the supplier.

We can also drive more attractive rates and conditions by leveraging the competitive tension that exists between the Financiers

Fitout Finance Trap No. 6 – Approaching Existing Lenders

Fitout and Asset Finance provide business owners with the opportunity to build relationships and a track record external to their existing primary Financiers.

Being over exposed to your primary Financier, (having “all your eggs in one basket”), is another Fitout Finance Trap to avoid.

Building external finance relationships can provide a “safety net” or fallback position if your primary Lender does not deliver.

Importantly, it can also avoid linking security that may be held by the primary Financier, to the Fitout Finance.


The foregoing are just some Fitout Finance traps to avoid!

Because it is complex and specialised, Fitout Finance is a field in which some major Banks choose not to play!

But it is the complexity, and managing the process for my clients, that I love!

There is nothing better than seeing a well-planned fitout come together!

Give me a call if you would like to learn more, or to get a highly competitive quote!