Office refurbishment can cost anywhere from $50,000 to $300,000 depending on your space.
Most small business owners believe they need to save cash or tap into overdrafts to fund a fit-out. Asset finance structures the purchase of office equipment, fixtures, and refurbishment items as a financed asset, allowing you to spread the cost across fixed monthly repayments while preserving working capital for day-to-day operations. Instead of depleting your business account, you maintain liquidity and potentially claim tax benefits through depreciation.
How Asset Finance Differs From a Standard Business Loan
Asset finance ties the funding directly to the equipment or assets you're purchasing. The items themselves act as collateral, which means lenders assess the value of what you're buying rather than only your business trading history. A business loan typically provides a lump sum for general purposes, while asset finance is structured around the specific items in your refurbishment.
Consider a medical practice refurbishing its reception and consultation rooms. The practice needs new reception desks, patient seating, consultation furniture, and clinical equipment totalling $120,000. Rather than applying for an unsecured business loan at a higher interest rate, the practice uses equipment finance to fund these assets. The lender assesses the resale value of the furniture and equipment, offering approval based on the asset value combined with the business's ability to service repayments. The practice keeps $120,000 in its operating account, continues paying staff and suppliers, and manages the refurbishment through structured monthly payments over five years.
Office Equipment That Qualifies for Asset Finance
Most tangible assets used in your office refurbishment qualify for financing. Office furniture including desks, chairs, meeting tables, and storage systems typically fall under equipment finance structures. Technology equipment such as computers, servers, phone systems, and audio-visual installations qualify as well. Air conditioning units, security systems, kitchen fit-outs, and even partitioning can be financed if they're identifiable assets rather than structural building work.
The distinction matters because lenders finance items they can repossess and resell if needed. Structural renovations like plastering, painting, or flooring are harder to finance as standalone assets because they become part of the building itself. If your refurbishment includes both, you might structure one portion through asset finance and another through a commercial loan.
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Chattel Mortgage for Office Refurbishment
A chattel mortgage is one of the most common structures for financing office refurbishment equipment. You take ownership of the assets immediately, and the lender holds a mortgage over them until you've completed your repayments. The loan amount covers the purchase price, and you make fixed monthly repayments over the agreed term, typically between one and seven years.
The financial advantage is in the tax treatment. Because you own the assets from day one, you can claim depreciation deductions on the equipment and claim the GST back upfront if you're registered. The interest component of each repayment is also tax deductible. This structure works particularly well if you're purchasing office equipment outright rather than leasing it.
In a scenario where an accounting firm spends $80,000 on new workstations, filing systems, and technology equipment, they arrange a chattel mortgage with a five-year term. The firm claims the GST back immediately, reducing the upfront cost to around $72,700. Over the life of the lease, they claim depreciation on the full asset value and deduct interest expenses, reducing the after-tax cost significantly while spreading payments across 60 months.
Finance Lease and Operating Lease Structures
A finance lease allows you to use the assets without owning them during the lease period. You make regular payments, claim the full lease payment as a tax deduction, and can choose to purchase the assets at the end of the term through a residual or balloon payment. An operating lease works similarly but is structured around shorter terms that match the typical upgrade cycle for office equipment.
Leases suit businesses that want to preserve capital and maintain flexibility. If your office equipment becomes outdated quickly or you plan to upgrade within three to five years, leasing avoids tying your business to depreciating assets. The trade-off is that you don't own the equipment until you exercise the purchase option, which means you can't claim depreciation, only the lease payments themselves.
How to Structure Your Refurbishment Finance
Start by separating your refurbishment costs into categories. Identify which items qualify as tangible assets and which are part of the building structure. For the tangible assets, obtain itemised quotes showing individual equipment costs. Lenders assess applications based on the asset list and your business's ability to service the loan amount through existing cashflow.
Your application will require recent financial statements, business activity statements showing GST treatment, and evidence of trading history. Most lenders want to see at least 12 months of operation, although some will consider newer businesses if you're purchasing high-value assets with strong resale potential. The loan amount typically covers up to 100% of the asset value, and some lenders will include installation costs if they're directly tied to the equipment.
If you're refurbishing multiple sites or have a rolling upgrade plan, you might structure finance across several agreements. This approach lets you manage cashflow more precisely and align repayment terms with the expected working life of different asset groups. Technology equipment might sit on a three-year term while furniture extends to five or seven years.
Tax Benefits and Depreciation Considerations
The tax treatment of your office refurbishment finance depends on the structure you choose. Under a chattel mortgage, you own the assets and claim depreciation according to Australian Tax Office schedules. Most office equipment depreciates over periods ranging from three to ten years depending on the item. You also claim the interest portion of each repayment as a business expense.
Under a finance lease or operating lease, you claim the full lease payment as a deduction rather than splitting it into principal and interest. This can produce higher deductions in the early years compared to depreciation, which is spread evenly or calculated using diminishing value methods. The GST treatment differs too. With a chattel mortgage, you claim the GST back upfront. With a lease, you claim GST on each payment as it's made.
Work with your accountant before committing to a structure. The difference in after-tax cost between a chattel mortgage and a lease can be several thousand dollars depending on your business's tax position and the asset values involved.
DriveHome Finance accesses asset finance options from lenders across Australia, including those specialising in office equipment, technology equipment finance, and broader commercial equipment finance. Whether you're fitting out a new premises or upgrading existing office equipment, we'll structure the funding around your business needs and cashflow.
Call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
Can I finance office furniture and equipment together?
Yes, most asset finance structures allow you to bundle office furniture, technology, and other tangible equipment into a single loan. Lenders assess the combined asset value and provide one facility with fixed monthly repayments covering all items purchased for your refurbishment.
How long does office refurbishment finance approval take?
Approval typically takes between two and five business days once you've submitted itemised quotes and financial documents. Some lenders offer conditional approval within 24 hours if your business has strong financials and the assets have clear resale value.
What happens if my office equipment becomes outdated during the loan term?
You remain obligated to complete the repayments regardless of whether the equipment is outdated. If you chose a lease structure with a shorter term or a chattel mortgage with a balloon payment, you'll have the option to refinance or upgrade sooner than a standard seven-year term.
Can I claim tax deductions on office refurbishment finance?
Yes, the structure determines what you claim. Under a chattel mortgage, you claim depreciation on the assets and deduct the interest component of repayments. Under a lease, you claim the full lease payment as a business expense.
Do I need to own my office building to access asset finance for refurbishment?
No, asset finance is based on the equipment and furniture you're purchasing, not the building itself. Whether you own or lease your premises, you can finance tangible assets used in your office refurbishment.
