For a bulky goods showroom owner, refinancing covers the property loan on the showroom and warehouse, the finance on the delivery trucks and forklift, the display fit-out and the limit that carries floor stock. Laid side by side, it becomes clear what a new rate, a new term or the building's equity would do to each one.
The showroom has grown in value since settlement, so why are the delivery trucks still on dearer finance with a different lender? With containers landing months before customers pay their balances, is the stock line carrying more than it was set up for? And with the property loan due for review, can the trucks, the forklift and the display fit-out finally be looked at alongside it?
The Large Format Retail Association reports that large format retail sales in Australia passed $102B in 2024, a quarter of all retail sales nationally. The same source puts the jobs the sector supports at over 470,000, across categories including furniture, electrical, hardware and homewares.
From the mortgage on the building to the finance on the last van in the fleet, Ardent Capital Group can assist with every refinance on the list, and we would enjoy working through it all with you.
Why a showroom owner's loans end up with several lenders
A large format showroom is a property business and a retail business at once. The building, the fleet and the stock were each financed at a different time, for a different reason, and the loans still reflect that.
- Two entities. Where a property trust or company owns the building and rents it to the trading company, the mortgage sits with the owning entity. The trucks, forklift and stock line sit with the trading company. The stock line is a borrowing limit the business draws on to pay for stock.
- Trucks bought one at a time. Each delivery truck or van was financed when the fleet grew, so each can have its own lender, rate and end date.
- Stock bought ahead of sales. Furniture and appliances are ordered and landed well before the sale periods they are bought for. The cost sits on the stock line until customers pay.
- A property loan review. A review of the property loan, or the end of an interest-only period, brings it back onto the table. On interest-only terms, the showroom pays just the interest each month, so nothing comes off the amount borrowed. The other loans can be looked at in the same conversation.
A refinance is a chance to set each of these loans against what it paid for, and to decide which belong together.
Example: a showroom group's loans side by side
This example uses illustrative numbers, not a real group's. They describe an owner whose property trust holds a freestanding showroom with a warehouse behind it, valued at $5M. The trust leases the building to the owner's trading company, which sells furniture and bedding and delivers with its own trucks.
The group carries four loans. Each is owed by either the property trust or the trading company, and each has its own monthly repayment.
| Loan | Borrower | Owing | Assumed rate | Months left | Each month |
|---|---|---|---|---|---|
| Property loan on the showroom and warehouse | Property trust | $2.8M | 7.2% | 216 | $23,162 |
| Two rigid delivery trucks | Trading company | $210k | 10.5% | 48 | $5,377 |
| Showroom display fit-out | Trading company | $85k | 12% | 36 | $2,823 |
| Warehouse forklift | Trading company | $36k | 11% | 30 | $1,378 |
| Group total | $3.131M | $32,740 |
The building carries the largest loan: $2.8M owed by the property trust at an assumed 7.2%, with 18 years left, repaid at $23,162 a month. The trading company's three loans add $9,578, for $32,740 across the group. That total steps down to $31,362 once the forklift is paid off, to $28,539 when the fit-out finishes, and to $23,162 when the trucks are cleared in month 48.
The trading company also draws on a $350k stock line, with $260k used. At an assumed 9.5% it costs about $2,058 a month in interest, and none of the refinance options changes it. Every rate shown is assumed for the sums and offered by no one.
How a refinance moves a showroom group's repayments
Whatever the loan, refinancing follows one pattern: the old lender receives a payout and a new loan stands in its place. For the showroom group, three settings on that new loan decide the monthly cost and the total cost.
- Rate. With the months unchanged, a lower rate cuts both the repayment and the interest still to pay. Lenders set the rate by what secures the loan, how the business trades and the credit history of each borrower and director.
- Term. How many months the loan lasts is its term. Spreading a balance across more months reduces each payment and raises the total interest, since the money is owed for longer. Some owners take that trade deliberately, such as through a year of fleet renewal.
- Security. Security is the asset a lender is entitled to take should repayments fail. A loan secured by the showroom building generally costs less than one secured only by the trucks or the business. The building then secures more of the group's debt.
Each of the example's four loans is amortising: it runs down to nil by the end of the term, unless it ends in a balloon, a lump sum left to the final repayment. Truck finance can carry one. Part of each payment covers the month's interest, worked out on the balance, and the rest pays the balance down. Early in a loan the balance is at its highest, so interest takes the bigger share.
Worked example: one month on the showroom's property loan
The property loan is the group's largest debt, so its first repayment shows the split clearly. At an assumed 7.2% on $2.8M, the month's interest is $16,800. That leaves $6,362 of the $23,162 repayment to reduce the balance. Across twelve months the balance falls by roughly $78,900.
Refinancing the showroom, the fleet and the floor stock
A showroom group's loans cover assets that last very different lengths of time. The building may be held for decades, while the trucks, forklift and display sets are replaced on their own cycles.
The property loan on the showroom and warehouse
The building is usually the group's largest asset, and the property loan is where most of the borrowing room sits. A showroom is retail property. Retail, office and industrial premises are standard commercial security, which gears to up to 80% of the property's value on a full-doc loan. That share of value is the LVR (loan-to-value ratio). A full-doc loan is one assessed on the business's complete financial statements and tax returns.
In the example, $2.8M against a $5M value is an LVR of 56%. Adding the trading company's three loans would take the property loan to $3.131M, an LVR of about 63%. That is inside the 80% band, subject to the valuation a lender orders. Bank terms on commercial property commonly run 10 to 15 years, and non-bank terms 25 to 30.
The valuation report records the site's zoning and its permitted use. Zoning is the council's planning category for the land, and the permitted use is what the site may be used for under it. Where the building is leased to the owner's own company, that lease and its rent reviews set the rent the property earns. Breaking a fixed rate on the property loan before it expires can bring a break cost, a fee for ending a fixed rate early. The more rates have fallen since the rate was fixed, the bigger it is.
Our page on refinancing a bulky goods showroom you own has more detail on the loan over the showroom, including releasing equity. For the steps a property refinance follows, see how a commercial property loan is refinanced.
Delivery trucks and vans
The fleet is how the showroom gets a lounge suite or a fridge to the customer's door, and each vehicle has its own finance. Trucks are commonly financed on a chattel mortgage. With this kind of finance the truck belongs to the business on day one, and the lender's mortgage over it lifts with the final payment.
Effective life is the number of years an asset can be used to produce income, taken from the ATO's determination or worked out by the business. It is a tax figure, not a promise of how long the equipment will run. In the ATO's effective life determination, trucks over 3.5 tonnes gross vehicle mass have 15 years. Gross vehicle mass is the most a vehicle can weigh fully loaded. Light commercial vans carrying a tonne or more, at 3.5 tonnes or under, have 12.
Refinancing can move each truck to a lower rate, or bring several trucks onto one loan with one end date. Paying out a vehicle contract before its last instalment may bring an early payout charge, a fee set out in the contract itself. A balloon at the end of a truck's finance can also be refinanced when it falls due.
Forklift, racking and the warehouse
Behind the showroom, the warehouse equipment carries long effective lives. The ATO gives forklifts 11 years, pallet jacks 10 and warehouse pallet racks 20. In the example the forklift has its own loan, the smallest and shortest of the four.
Showroom display and fit-out
Display sets, room settings, lighting and the sales counter are what customers walk through, and they change as ranges change. The ATO gives freestanding retail furniture and showcases 10 years, and freestanding counters 10. Some showrooms are tenancies in a homemaker centre, a shopping centre made up of large format stores, rather than owned buildings. There, the remaining lease years limit how long fit-out finance can run, and the make-good clause lists what the tenant strips out or restores when the lease is over.
The floor stock line and the ATO
Floor stock is where a bulky goods business ties up its working capital, the money the business needs to keep trading from day to day. Containers of furniture and appliances can be paid for weeks or months before they sell. Customer deposits on orders bring some cash in early, with the balance commonly paid on delivery. The stock line covers the rest.
Because the stock line revolves, it is drawn as stock is bought and repaid as it sells. Moving the drawn amount into a term loan, one repaid in set instalments over a fixed period, pays it off, yet takes away the limit the next container depends on. In the example it stays separate.
Where the trading company owes the ATO and is paying it off by instalments, borrowed money can clear that debt, subject to the lender. Interest on borrowed money may be tax deductible for the company, so it can be claimed against its income. Interest the ATO charges on late tax lost its deduction from 1 July 2025. The group's accountant works out what applies.
Putting the property trust's and trading company's loans together
With the building, fleet, fit-out and forklift each understood, the next question is whether the trading company's loans should move onto the building. Each arrangement shifts the monthly repayment and the long-run interest by different amounts.
Worked example: four ways to carry the group's $3.131M
Each option is measured against leaving the group's loans as they stand, first by the change in this month's repayments, then by the change in all interest still to come.
| Arrangement | Group repays monthly | Monthly difference | Interest ahead | Interest difference |
|---|---|---|---|---|
| Leave all four loans as they are Today | $32,740 | Starting point | $2,273k | Starting point |
| Reprice the property loan only | $31,924 | $816 less | $2,097k | $176k less |
| Add the trucks, fit-out and forklift to the property loan, over 48 months | $31,119 | $1,621 less | $2,254k | $19k less |
| Add all three to the property loan over its full 216 months | $25,900 | $6,840 less | $2,464k | $191k more |
Rounded and illustrative, with assumed rates that are neither quotes nor today's pricing. Not counted: the stock line, any break cost or early payout charge, establishment fees and the valuation.
Repricing just the property loan takes $816 off each month and $176k off the interest, without changing any end date.
Another option moves the truck, fit-out and forklift balances onto the building but keeps them on a 48-month timetable. The repayment falls by $1,621, and interest falls by $19k, because those balances now carry the property rate rather than their own.
Spreading the same $331k across the building's remaining 18 years frees $6,840 a month and adds $191k of interest. It also keeps the truck debt running for 18 years, longer than the 15-year effective life the ATO gives a truck, and well past the 10 years given to display furniture.
Each option trades some relief now against some cost later, and the right balance depends on the fleet plan, the sale calendar and the stock line. We would put each payout letter, a lender's written figure for clearing its loan, beside these options, then present your chosen arrangement to lenders. The table is arithmetic only; it quotes and approves nothing.
What can secure the refinanced loans
Several assets in a showroom group could back the new loans, and offering each one commits something different.
- The building. A registered mortgage over the showroom and warehouse secures the property loan, and can secure the trading company's debts as well, within the 80% band.
- The trucks and forklift. Vehicle and equipment loans are secured by the asset financed.
- The trading business. A general security agreement gives a lender a claim over what the trading company owns, including its stock and the money customers owe it. It is registered on the PPSR, the national register of security interests in personal property. It does not cover land, buildings or fixtures to land.
- Guarantees. Directors commonly guarantee the trading company's loans, and the trading company may guarantee the property trust's loan, or the other way around.
The property trust and the trading company
With the property and the trading business in separate entities, a lender assesses both together. It reads the rent the trading company pays the property trust, the trading company's own figures and every guarantee between them. Choosing or changing that entity set-up is for the group's accountant and lawyer. We structure the finance around the set-up already in place.
Getting the showroom group ready to apply
A showroom's year has its own peaks in sale periods and its own quiet stretches. Timing an application with that rhythm in mind means the figures in it show the full year.
Dates that shape the timing
A handful of dates in the group's year shift the cost of refinancing, or which months appear in the application.
- The property loan review or expiry. The months before it are the natural time to look at every loan in the group together. A scheduled review of the property loan is the lender's check on the borrowing, apart from the rent reviews in the lease. It looks at how both the property trust and the trading company are going, such as a stretch when containers are paid for well before customers settle. Preparing for it and comparing lenders can happen in the same months. Our guide explains how a property loan review works.
- Break costs and payout charges. Each lender can state in writing the sum needed to settle its loan on a chosen date, its payout figure. Those from the property lender and from each vehicle financier show whether a charge outweighs the saving.
- A fleet replacement coming up. If a truck is due for replacement, the old loan's payout and the new truck's finance can be arranged as one.
- A rent review between the entities. The current lease and its latest review go in with the application.
- Lodgements. Getting both entities' BAS and returns up to date before applying helps. Each entity lodges a business activity statement, or BAS, to report and pay its business taxes to the ATO.
How a showroom's income comes in
A showroom is paid through deposits, balances and finance settlements, with stock and freight costs running ahead of them.
- Deposits and balances. Customer deposits arrive at order, and balances on delivery. Statements show both, along with card takings and settlements from customer finance programs.
- Stock turn. How long stock sits before it sells shows in the stock line balance across the year.
- Sale periods. Sales such as end of financial year can lift takings in some months more than others.
- Costs. Freight and container costs, delivery drivers, warehouse staff and truck running costs sit beside wages for showroom staff under the General Retail Industry Award. The award fixes the lowest rates a showroom can pay those staff.
- Rent between the entities. The trust's rental income and the trading company's ability to pay it are read together.
What to collect for the application
Nearly everything an application needs is already held by the group's accountant, its current lenders or its landlord files.
- Payout letters for the property loan and each vehicle, equipment and fit-out contract
- For the property trust and the trading company alike: recent BAS, plus financials and tax returns for each of the past two years
- The lease between the entities, with rent reviews, and any lease to an outside tenant
- Business bank statements, stock line statements and an ATO statement of account
- A list of the fleet with registration, age and finance owing on each vehicle
- Council rates notice and any recent valuation of the showroom
- Statements for every director's own loans and credit cards
Questions bulky goods showroom owners ask about refinancing
Our showroom has gone up in value. Can the equity clear the finance on the trucks?
It can, if the valuation and the lender allow. The extra borrowing has to stay within the band for standard commercial property, and the group's trading has to support the higher repayment.
If the trucks go onto the property loan over 18 years, what happens when we replace them?
The old trucks would still be part of the property loan's balance. The new trucks need their own finance, so the group would be repaying both at once unless the truck debt was set on a shorter timetable.
The building is in a trust and the business in a company. Can one lender take both?
It can, subject to the lender. The lender then looks at both entities, the lease between them and the guarantees that link them.
Does the zoning on our site affect the refinance?
The valuation records the zoning and what the site may sell. A planner confirms the permitted use if there is any question about it.
Can the stock line be refinanced too?
It can, subject to the lender. It can move to another lender as a revolving limit, or have its limit changed.
Can I refinance the finance on the trucks without touching the property loan?
It can, subject to the lender. Vehicle loans can be refinanced on their own, secured by the trucks, which leaves the property loan as it is.
There's a balloon due on one of our vans next year. What are the options?
Cash can settle the balloon, or it can be refinanced over a further term, or paid out as part of financing a replacement van.
We also lease part of the site to another retailer. Does that help?
Rent from an outside tenant is income to the property trust, on top of the rent the group's own trading company pays.
Will a lender look at our personal home loan?
Generally, yes. Each director's personal debts form part of the assessment, because the directors guarantee the group's loans.
Will refinancing the building restart the loan's term?
It can. A new property loan can run over a fresh term, up to the lender's maximum, or be kept to the years remaining. A longer term lowers the repayment and adds interest.
Talking through the showroom's loans with us
Refinancing well matches every loan to the asset it paid for: the building held for the long term, the fleet on its replacement cycle, and the stock line that funds each shipment. Ardent Capital Group can help with the property loan, vehicle and equipment finance, the display fit-out and the stock and working-capital finance a large format business relies on. Drawing on a background in financial planning, the Ardent Capital Group team can develop a strategy for how the group's loans sit across both entities, with the tax and ownership questions settled by your accountant before signing. Whenever the timing suits, bring the group's loans to us and we will go through them together.
