Cafe Fitout Finance With No Repayments While You Build
How a 120 day cafe fitout repayment holiday works, when the clock starts, what capitalised interest costs, and what happens if the build runs late.
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Fitout sub-limit / 120 day repayment holiday / Capitalised interest
The fitout sub-limit is the part of a revolving equipment facility that pays eligible build invoices while the new or refurbished site is not trading. For 120 days no repayment falls due on that sub-limit because the interest is added to the balance instead of being billed. The important questions are when that clock starts, what it actually costs, and what happens if the cafe is still not open on day 121.
Quick Answer
A cafe fitout sub-limit lets an established trading business pay eligible build invoices with no repayments on that sub-limit while the new or refurbished site is not trading, because the interest is added to the balance instead of being billed during the build.
The sub-limit sits inside a revolving equipment facility, is typically written at a minimum of $25,000, and gives you a 120 day repayment holiday in which to upload and pay eligible fitout invoices. For the facility structure described here, the clock is tied to when the sub-limit is set, not to opening day, and on day 121 the drawn balance starts amortising monthly in advance over a 5 year term for that transaction.
The relief is not free. On the illustration used below, about $5,573 of interest is added to a $100,000 balance during the 120 day window. Compared with paying that interest during the build, capitalising it increases the later five-year repayments by about $2,612 in total because the amortising balance starts higher.
It is a structure for a business that is already trading, because the facility is written on turnover and trading history rather than on the new site itself. A first-time cafe startup may still have other finance options, but it should not assume this particular sub-limit is one of them.
Also called cafe fit out finance. The 120 day window is often called a repayment holiday, the cost side is sometimes described as interest capitalisation rather than capitalised interest, and drawing the limit down invoice by invoice is called progressive drawdown.
Can you fit out a cafe with no repayments while you build?
Yes. For the facility structure described here, an established trading business can use a cafe fitout sub-limit to pay eligible build invoices with no repayments on that sub-limit during the 120 day window, because the interest is capitalised instead. The site being fitted out may be closed or not yet trading, but the applicant business itself needs established turnover and trading history. In practice, that makes this structure most relevant to an existing operator opening a second location, relocating, or refurbishing an established venue rather than a first-site startup. This page covers that funding window and its consequences; the broader options sit under fitout finance.
Where you are in the build changes which part of this applies
Most people reading this are not standing at the start of the job. They have signed something, booked someone, or already paid a deposit, and the advice that suits a build not yet started is useless to a build already running. Find your row first, because the answer changes materially between them.
| Where you are | What the sub-limit can do from here | What to work out first |
|---|---|---|
| Not trading yet, this is a first cafe | Not this structure. This sub-limit is written on established turnover and trading history | Which startup or first-site funding options are actually available before you rely on finance in the lease or build budget |
| Trading, lease not signed | Everything on this page, and this is the only stage where the window can still be lined up against the build | Dating the window start off the realistic completion date rather than the optimistic one |
| Trading, lease signed, build not started | The full window, provided the limit is in place before the first invoice is uploaded | Sequence, not calendar. The limit has to exist before invoices can be paid through it |
| Build under way and cash is short | The invoices still to come, which is usually less than the whole build | How much of the window would be left against how much of the build is left |
| Window already running, build is late | Nothing extends it. Day 121 arrives on schedule | What the first repayment is on the balance actually drawn, and what month it lands in |
Does no repayments while you build mean you need no cash before opening?
No. The repayment holiday only removes scheduled repayments on this sub-limit during its 120 day window. It does not mean every pre-opening cost is financed. Rent or bond, opening stock, payroll, permit and registration costs, overruns, deposits already paid, and building works outside the eligible invoice pool can still create a cash gap.
That gap is why the finance plan should be built around the whole path from lease signing to first stable trade, not just the shopfitter quote. The separate lease-to-opening gap costs are worth mapping before the sub-limit is activated, so the repayment holiday is not used to solve one cashflow problem while another is left unfunded.
When is a 120 day fitout sub-limit the wrong structure?
It is the wrong tool when the main problem is not eligible fitout invoices. If most of the money is needed for rent, wages, opening stock or general working capital, if most of the fitout has already been paid from your own cash, if the quote is dominated by permanent building works the facility will not accept, or if the business does not have the trading history the facility requires, a fitout sub-limit can leave the real funding gap untouched. A short build may also make a repayment holiday less valuable than a simpler or lower-cost structure.
That is the point to compare the wider fitout finance options rather than forcing every cost through one product. Where the issue is stage payments versus flexible cash, the separate stage-payments versus line-of-credit and working-capital comparison is the more useful next read.
How does a cafe fitout sub-limit work?
A fitout sub-limit is a ring-fenced part of a revolving equipment facility that lets eligible fitout invoices be paid during a repayment holiday, with interest capitalised instead of a scheduled repayment. For the facility structure described here, the sub-limit is typically set from $25,000 with a 120 day window, invoices are generally paid direct to the supplier, and the typical minimum single transaction is $2,000. Exact invoice, asset and cost eligibility still depends on the lender and facility terms.
The limit behaves as a working limit rather than a lump sum. It is drawn progressively against supplier invoices as the build consumes it rather than taken in full on day 1. That progressive drawdown is also what keeps the cost down: interest accrues on the amount actually drawn, not simply because the full limit exists, so less outstanding for less time means less interest. Quote and document standards sit outside this page, and what a lender-ready quote and document pack looks like is set out separately.
What happens when a cafe fitout invoice or progress claim arrives?
Each invoice is linked to the fitout inside the facility, and the transaction amount has to match the invoice exactly. The invoice itself typically has to carry the business or director name, the supplier's ABN, the supplier's payment and contact details, and the amount due. The supplier is then paid through the facility once the transaction is accepted, rather than the borrower receiving the fitout budget as cash and paying trades themselves.
That is why deposits, builder progress claims, variations and final invoices should be checked before you promise they will be funded. A variation can push the invoice above the remaining limit, and an ex-GST quote can understate the amount actually payable. Treat the approved limit and the current unpaid invoice schedule as two separate numbers, and confirm whether a deposit, variation, reimbursement or GST component is eligible under your actual facility before the payment date arrives.
| Stage | What happens | What you pay that month |
|---|---|---|
| Sub-limit set | Limit is typically written at $25,000 or more inside the facility | $0 |
| Days 1 to 120 | Invoices are uploaded and paid direct to the supplier, typically a minimum of $2,000 a transaction | $0 |
| Day 120 | The window closes and the accrued interest is added to the balance | $0 |
| Day 121 | The balance starts amortising, monthly in advance | First full repayment |
| Month 60 | The 5 year term for that transaction ends | Final repayment |
When does the 120 day repayment holiday start?
The 120 days typically run from the date the fitout is set up inside the facility. Not from the day the builder starts, and not from the day the cafe opens. That makes the setup date a finance decision rather than an administrative step, because setting the fitout up well before the build is ready to draw against it burns part of the repayment holiday while very little work is being funded.
Before the fitout is created, put that date beside the realistic build completion date, the rent-free or reduced-rent end date, and the local approval dates. Confirm the exact trigger in your own facility documents because other lenders and structures can differ. The goal is not to start the 120 days as early as possible; it is to start them when they cover the period in which the site is consuming cash but is not yet reliably trading.
What does 120 days of capitalised interest cost?
On $100,000 of cafe fitout invoices drawn at the start of the window at an indicative 16.95% p.a., 120 days of capitalised interest adds about $5,573 to the balance. That higher starting balance lifts the later repayment in this illustration from about $2,448 a month to about $2,584 a month.
Basis: the $100,000 is an illustration and not a market fitout cost. Indicative rate 16.95% p.a. commission-inclusive for the $250,000 to $1,500,000 turnover band, as at 26 August 2026. Indicative only, not a quote and not an offer.
Interest capitalisation is the whole of the trade. You are buying cashflow relief across the build and paying for it in the balance that amortises afterwards, which is a different question from whether the facility is affordable at all.
Either way, the interest that accrues over the 120 day window in this illustration is about $5,573. The additional $2,612 shown in the table is not another fee: it is the extra interest paid later because the five-year amortising balance starts about $5,573 higher when the build-period interest is capitalised.
| Line | Capitalise the interest | Pay the interest as it accrues |
|---|---|---|
| Repayment during the 120 day window | $0 | about $1,393 a month |
| Balance when amortisation starts | about $105,573 | $100,000 |
| Monthly repayment over 5 years | about $2,584 | about $2,448 |
| Total repaid across the facility | about $155,065 | about $152,452 |
| Extra cost of the cashflow relief | about $2,612 | $0 |
Basis: $100,000 of invoices drawn at the start of the window, used as an illustration and not as a market fitout cost, indicative rate 16.95% p.a. commission-inclusive for the $250,000 to $1,500,000 turnover band, simple interest across 120 days, then 5 years monthly in advance. Staged invoice uploads across the window cost less than this because less is outstanding for less time. Indicative only, not a quote, not an offer, not an approval, and the figures you are offered will differ.
From our broking, indicative
Across the cafe fitout facilities we place, the shape behind those numbers is consistent, and these are the market-typical non-bank terms we work to.
- Indicative rate on a revolving equipment facility for a business in the $250,000 to $1,500,000 turnover band, about 16.95% p.a. commission-inclusive, as at 26 August 2026
- Minimum fitout sub-limit $25,000, minimum single transaction inside it $2,000, as at 26 August 2026
- Capitalising window of 120 days, fixed, and it does not extend
- The window is dated from when the fitout is set up inside the facility, not from when the build starts, so the setup date is worth holding until the build is ready to draw
- Amortisation after the window over a 5 year term for that transaction, monthly in advance, with no establishment fee
- Progressive drawdown across the window costs less than a single draw at the start, because less is outstanding for less time
- Invoices already paid from your own funds are a different question from invoices still to come, so a facility arranged mid-build usually covers less of the job than one arranged before it starts
Indicative only, based on facilities we have placed, not a quote, not an offer and not an approval. Actual terms depend on lender policy and your circumstances at the time of application. Not financial advice.
What happens when the 120 day window ends?
On day 121 the capitalised drawn balance starts amortising, monthly in advance, over a 5 year term for that transaction. The repayment is calculated on the balance including the capitalised interest rather than on the invoices alone. Opening the cafe earlier does not by itself end the 120 day window, and opening later does not extend it; the lender schedule, not opening day, controls when the first repayment falls due.
As the balance is paid down the revolving limit replenishes, so available capacity can return rather than the facility simply disappearing at the end of the fitout. For the facility structure described here there is typically no establishment fee, but pricing and fee treatment should still be checked in the actual offer before you rely on it.
Can you pay a cafe fitout sub-limit out early?
The balance on a revolving facility can be paid down ahead of schedule, and the limit replenishes as it is, which is the point of the structure. Whether a full early payout carries a cost depends on the facility, so it is a term to confirm before you sign rather than after the cafe is open and trading well.
One thing to be clear on. Once the window closes, the capitalised interest is no longer interest, it is part of the principal you are repaying. Paying down early reduces what you carry interest on from that point forward, but it does not refund the interest that has already been capitalised into the balance. Anyone modelling an early exit on the basis of clawing back the $5,573 has the mechanics the wrong way around.
What can you pay for inside the 120 day window?
The window is designed to pay eligible fitout invoices. For the facility structure described here, that can include invoiced soft costs such as design, project management and installation labour as part of the eligible fitout pool, subject to lender and facility terms. The harder boundary is the part of the job that stops being identifiable equipment and becomes part of the building.
Which parts of a cafe fitout can a lender actually finance?
Equipment lenders are generally more comfortable with the parts of a cafe fitout that remain identifiable and removable, while permanently affixed building works are treated differently. The Australian Government PPSR guidance draws the same legal boundary at a high level: personal property includes machinery and equipment but excludes land, buildings and fixtures. In practice, lender policy still decides what is eligible for equipment finance and what must be funded another way. PPSR guidance on business assets explains why that distinction matters for secured goods.
| Part of the job | How it is usually treated | Why it matters |
|---|---|---|
| Coffee machines, grinders, fridges, ovens, display cabinets | Commonly treated as chattels or removable plant | Often suitable for equipment finance because the assets remain identifiable and removable, subject to lender and asset criteria |
| Loose furniture, tables, chairs, benches, outdoor seating | Often treated as chattels | Can be eligible within a fitout or equipment structure, though lender treatment and minimum transaction rules vary |
| Joinery, counters and built-in bench units | Depends on how they are fixed | The more permanent the fixing, the more it reads as a building work rather than plant, and the more likely it falls outside the financed portion |
| Hardwired electrical, plumbing and hydraulic, exhaust canopy and grease trap | Often treated as building works or mixed works | The permanently affixed portion may fall outside standalone equipment finance, so the quote should be split before the funding gap is calculated |
| Waterproofing, fixed tiling, ceilings and shopfront glazing | Building works | Attaches to the premises rather than remaining your asset, which is a lease question to check before you spend |
The split bites twice. Once at funding, where it decides how much of the quote the sub-limit covers and how much you fund from your own cash. Then again at the end of the lease, where what you can remove and what you must leave or make good depends on which side of the line an item fell. The detail sits in which parts of a fitout are chattels and which are building works, and it is worth reading before you sign a fitout contract rather than after.
On tax, the ATO includes shop fitouts and leasehold improvements within capital works and says the statutory capital-works rate can be 2.5% or 4.0% depending on when construction began, the type of capital works and how they are used. Separate plant can have different depreciation treatment. Confirm the item-by-item split with your accountant before relying on it; the wider funding treatment sits with fitout finance.
Can cafe fitout finance reimburse invoices you already paid?
Do not assume it can. The fitout sub-limit described here is designed around eligible invoices being uploaded and paid through the facility, usually direct to the supplier. If you have already paid a deposit or invoice from your own cash, reimbursement becomes a lender-specific question rather than an automatic feature of the sub-limit.
If the build is already under way, split the budget into three columns before you size the finance: amounts already paid, invoices still unpaid, and costs still expected but not yet invoiced. Treat your own cash as staying spent unless reimbursement has been confirmed in writing. That prevents a mid-build facility from looking large enough on paper while still leaving a cash hole behind it.
What happens if the fitout runs past 120 days?
No. For the facility structure described here, the 120 day window does not extend just because the cafe fitout runs late. If the build is still running on day 121, the drawn balance starts amortising anyway and the first repayment can fall due before the site is open. Delays can come from building work, equipment lead times, landlord approvals or food-business permits, and none of those external clocks automatically move the lender clock.
The practical move is to set the window start against a realistic completion path rather than the optimistic build date. business.gov.au notes that food and hospitality licences and permits are largely managed by state, territory and local governments, so the approval path depends on where the cafe is located. Delay between finance approval and funding is a different clock again; delays between approval and funding should be planned separately from delays inside the fitout itself.
How do the remaining lease term and landlord contribution affect the fitout finance?
A five year repayment schedule and a five year right to occupy the premises are not the same thing, so compare the finance term with the remaining lease term and any renewal option before you commit. The NSW Small Business Commissioner notes that renewal options can carry further refit obligations and that tenants may also bear removal costs at lease end. Lender treatment of an unexercised option varies, so do not assume an option automatically gives the finance the same effective term as an exercised lease.
A landlord fitout contribution is also different from rent-free time and may not arrive when the builder needs paying. Australian Government guidance on lease incentives expressly recognises arrangements where a lessee pays for fitout and is reimbursed by the lessor later. If that is your lease, model the period between paying the invoice and receiving the contribution as a real cash gap rather than subtracting the contribution from the budget on day one. The separate landlord incentive gap guide covers that timing problem in more detail.
The three clocks that decide whether the first repayment hurts
Three separate parties set three separate dates on a cafe fitout, and none of them coordinate with each other. The one that runs out first is the one that determines whether day 121 is an inconvenience or a problem, so map all three on one page before the window starts rather than discovering the gap in month five.
| The clock | Who sets it | What happens if it runs out first |
|---|---|---|
| The capitalising window | The lender, and typically dated from when the fitout is set up inside the facility rather than from when the build starts | Day 121 arrives and the first repayment falls due whether the cafe is open or not |
| The rent-free or reduced-rent period | The landlord, dated from the lease | Full rent starts on a site that is not yet earning, on top of a repayment that may already have started |
| Planning, fitout and food-business approvals | The relevant local, state or territory authorities, depending on location and business activity | Opening can be delayed while the finance and lease clocks continue to run |
The approvals clock works differently across Australia. The responsible bodies, permit names and order can vary by state, territory, council and the activities of the venue. A rent-free period is also different from a landlord fitout contribution even where a lease offers both. Check the process for the jurisdiction your cafe is in rather than carrying across a Melbourne or Sydney example, and confirm the lease side with your solicitor.
To run the dates and the numbers against your own build, the cafe loan pack is the place to start.
The fitout sub-limit answers one specific cashflow question: how an established business can fund eligible fitout invoices without a scheduled repayment on that sub-limit during the 120 day build window. The trade is that the accrued interest is added to the balance and repaid afterwards. On the $100,000 illustration, about $5,573 is capitalised during the window and that larger starting balance creates about $2,612 of additional interest across the later five-year repayments compared with paying the build-period interest as it accrues. The structure only works cleanly if the 120 day clock, the lease clock, the approval clock and the cash you still need outside the facility have all been mapped before the build gets tight.
Key takeaway: the window does not make the interest disappear, it moves it into the balance and starts the clock on day 121 whether the cafe is open or not.Frequently Asked Questions
Yes. A fitout sub-limit sits inside a revolving equipment facility, and that facility is written on turnover and trading history, so an operator opening a first cafe with no trading entity behind it will not be assessed on this structure. Where it fits is an established business fitting out a second site, a relocation, or a refurbishment of a venue that is already trading. If you are opening a first site, the funding shape is a different conversation and it is worth having before you sign a lease rather than after.
Yes. A fitout sub-limit of $25,000 or more carries a 120 day capitalising window, sometimes called a repayment holiday, and no repayment falls due inside it. The trade-off is that the interest still accrues across those 120 days and is added to the balance, so you pay for the relief afterwards rather than avoiding the cost. Cafe fit out finance structured this way suits a build with a real cashflow gap, and the wider picture sits under fitout finance.
$25,000 is the typical minimum sub-limit and $2,000 the typical minimum single transaction inside it. The limit has to be written at $25,000 or above to exist at all, and each invoice you upload against it has to clear $2,000. Both figures are indicative and market-typical rather than universal. To size a limit against your own build, the cafe loan pack sets out what to bring.
Sometimes, and it cannot be assumed. The finance window and the rent-free period are set by different parties on different dates, so check them against each other before the window starts rather than after. Where they are out of step, the repayment can begin after the rent concession has already ended. The timing side of the lease is covered in the lease and fitout finance checklist.
Leasehold improvements including shop fitouts are treated as capital works, claimed at the statutory rate of either 2.5% or 4.0%, and some fitout items are depreciated separately as depreciating assets rather than under capital works. Which of your costs fall where depends on your circumstances and on how each item is installed, so confirm the split with your accountant before you rely on it.
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