Guide

You have outgrown the space. What funds a buildout, a month of two rents and the week you are closed?

Negotiate a tenant improvement allowance and free rent into the new lease before anything else; landlords fund buildouts for tenants they want. Then a working capital loan or line on your current deposits covers what the lease does not — the overlap month of two rents, the movers, the deposit, and a cash buffer for the days you are closed or running at half speed — funded in one to three business days. New fixtures and equipment finance separately, as equipment.

What a move actually costs

The visible cost is the movers and the deposit. The real cost is the list around them: a buildout to make the new space usable, an overlap month or two when both leases are running, the signage and the utilities setup, the marketing to tell customers where you went, and — the one every guide leaves out — the days the business is closed or at half capacity while the shelves are in a truck. For a small commercial space, the total commonly runs from several thousand dollars to the tens of thousands, and the overlap and the closed days are where the surprise lives.

The landlord is the first lender

A tenant improvement allowance is the landlord paying for some or all of the buildout, amortized into the rent or simply given, because a leased-out unit with a good tenant is worth more than an empty one. Free rent for the first month or two is the same logic. Both are normal in commercial leasing and both are negotiated before signature, not after. A tenant who asks for a buildout allowance and two months free is not being difficult. A tenant who funds the landlord's improvements out of an advance is.

Working capital for the overlap and the closed week

What the lease does not cover — the overlap rent, the deposit, the movers, the IT and phone cutover, and a buffer equal to a week or two of payroll and fixed costs for the days you are not fully trading — is a working capital loan or a line of credit on your current location's deposits. Decision in about a day, money in one to three business days, amounts around half to one and a half times a month's deposits.

Send the new lease and the old one with the statements. A funder reading a signed lease at a larger space, next to a year of growing deposits, is reading a business expanding; the same request with statements alone is an unexplained amount.

What each underwriter weighs

A BANKA REVENUE-BASED FUNDERPERSONAL CREDIT SCOREheavysomeCOLLATERAL TO PLEDGEheavynot looked atTWO YEARS OF TAX RETURNSheavynot looked atTIME IN BUSINESSheavysomeMONTHLY BANK DEPOSITSsomeheavyDEPOSIT CONSISTENCYnot looked atheavyINDUSTRY AND STATEsomeheavy
The same business, read two different ways. A bank decision is built on credit, collateral and filed accounts; a revenue-based funder builds it on the money moving through your account. That is the whole reason a bank decline says very little about whether you can be funded.

Fixtures, racking, kitchen, chairs: equipment

A bigger space usually needs more of whatever the business runs on — racking for a warehouse, a longer cooking line, more stations, more lifts — and all of it is an asset. Equipment financing over two to seven years with the vendor paid directly is far cheaper than putting the fit-out on the same advance as the movers. Two applications, two days apart.

Sources

Related questions.

Will a funder lend against a location that hasn't opened yet?
It lends against the current one. The new lease is the reason for the request; the old location's deposits are the application. A business that has already moved and has a thin month in the statements should send the lease and a sentence, and the dip explains itself.
Should I break the old lease early to avoid two rents?
Read the lease. Early termination clauses often cost more than the overlap, and a landlord will sometimes accept a replacement tenant instead. One month of two rents is usually cheaper than a breach; three months is a negotiation.
Is a relocation a red flag to a funder?
A move to a bigger space with growing deposits behind it is the opposite. A move to a smaller or cheaper space with falling deposits is a different file, and the statements show which one you are.

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