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Insight / News

What are the financing options for a design and build?

During these unstable financial times, it may be difficult to think about the best way to finance getting your workspace fitted out or you may be wondering what financing options there are for you out there.

Despite some common misconceptions, your company doesn’t need to have huge cash reserves to finance your next office fit-out project.

There are three main options to finance your project:

  • Paying from capital funds
  • Loaning from the bank
  • Leasing the fit-out

Paying from capital funds

This means paying the cost off in one lump sum. This has several pros and cons, as financing the office fit-out from capital funds means that all assets belong to the company from the outset, there are no heavy interest rates to pay nor no ongoing payments to budget for. However, it can leave your cash flow vulnerable, and limit your budget for other areas of the business that may need it more.

Using the capital expenditure option allows for a 19% tax relief figure to be deducted, once tax has been added to the allowable fit-out value.

Loaning from the bank

Loaning from the bank involves paying monthly repayments that are planned in advance, and that usually last the lifetime of the assets you are purchasing.

The drawbacks of loaning from the bank are that there may be upfront fees and requests for charges or debentures which need to be accounted for or are subject to fluctuations in interest rates. Monthly repayments could have an adverse effect on your cash flow and it’s also risky if the loan is secured against your personal property or assets.


The leases are very similar to the lease rental agreements you would use for IT and telecoms etc. The process involved in arranging a lease is quite straightforward.

However, the leases are only secured against the project itself and therefore covenant strength of the leasee is a fundamental issue. The funders are interested in the usual

financial information – statutory and management accounts to help them reach their underwriting decision.

The underwriting process usually takes 2 – 5 days depending on the financial status of the applicant and the size of the project.

At the end of the lease period you have two choices:

  • Continue to rent the installation for the same monthly amount
  • Negotiate indefinite use of the installation for a small one off charge

The benefits of leasing

Leasing is a tax-efficient and cost-effective method of achieving your ideal space whilst retaining cash in your business.

Maximise cash flow

Leasing means no large up-front payment so you keep the cash in your business, preserving liquidity and freeing up valuable working capital for revenue-generating activities.

Fixed payments for accurate budgeting & effective forecasting

Unlike other methods of finance such as bank loans and overdrafts, payments are fixed for the duration of the lease period making budgeting simpler and eliminating unexpected variations.

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Spreading the cost allows you to achieve the project specification of your choice, not make short-term decisions based on the current budget.

Tax advantages

If you lease your fit-out project, repayments are 100% allowable against taxable profit.

Leasing is the most tax-efficient method of financing your furniture and fit-out project and for high tax-paying organisations can offer significant savings.

Existing bank credit lines unaffected

Leasing leaves bank credit lines intact and free for other business purposes. Working capital and bank overdrafts are also unaffected.

Loan vs Lease – what’s the difference?

Whilst loans are similar to leases, it’s critical to understand they are not the same. There are some crucial differences, such as when making a lease, you can invest cash and credit into other areas of the business, it’s non-cancellable and there is one fixed monthly payment. It’s advantageous for using equipment that loses value and is inclusive of soft costs and it’s easy to upgrade or add equipment. In comparison to a loan, which ties up your credit line and limits the other investments you can make, rates can fluctuate and it’s convenient to upgrade or add additional equipment as needed.    

Setting a budget

Setting a budget is crucial to any project, especially a long-term project such as going down the design and build route when updating your office space.

Having an accurate budget allows a workspace fit-out to create a tailored brief that correctly solves any issues you are having.  

Using our *FREE* cost calculator can help you to set an approximate budget, depending on what you are looking to include in your workspace plans.

Check out the calculator here, and how to use it here.

Our Define process helps you get the best value for money, by digging deeper into your company’s needs, we can make decisions based on actual data about your staff, and help you work through any focuses on sustainability, neurodiversity, and more in the workplace.

Want to get in touch about your upcoming workspace project? Send us an email at or give us a call at 0161 246 2365.

Written on the 23rd May 2024 by

Working behind the scenes, Carlie assists with the purchasing and setting up of new projects and looks after day-to-day tasks within the office.

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