Opening in another state: what it costs and how to fund it

A Brisbane electrical contractor that wins its first job in Newcastle usually thinks about the van, the apprentice and the quote. The things that catch it out are different: a payroll tax calculation it has never needed, a workers compensation question about the apprentice, a licence that isn’t quite portable, and three months of rent on a yard before the second invoice is paid.

Taking a business across a state line is the same business with a different rule book. The funding you need depends less on how big the move is and more on how much of it you’ve costed in advance. Here is how to cost it and then match the money to each part.

What does moving into another state really add to the bill?

Start with a list of costs that are specific to the state rather than just bigger versions of what you already pay.

• Payroll tax. Each state taxes wages paid in that state, but the tax-free threshold is shared. In NSW, for instance, the 2026-27 threshold is $1.2m, scaled down by the proportion of your total Australian wages that are paid in NSW. Business owners who stay under the threshold at home sometimes cross it for the first time when wages are spread across several states, because the group threshold is shared out. Check each state revenue office; rates and thresholds differ.
• Workers compensation. You don’t necessarily buy a new policy in every state. For workers who move across borders, Safe Work Australia describes a three-step “state of connection” test: where they usually work, then where they are usually based, then where your principal place of business is. The answer decides which state’s scheme covers them. Ask your insurer before you send someone for a long stint.
• Licences and registrations. Your ABN and company registration are national. Many trade, building and professional licences are not. Some can be carried across under mutual recognition, others need a fresh application, and processing time can delay your start date.
• Premises costs. A bond or bank guarantee, legal fees on the lease, a fit-out, signage, utilities set-up and make-good obligations at the end.
• Land tax and stamp duty if you are buying rather than leasing; these vary a great deal by state (see the stamp duty guide and the land tax guide).
• Freight and logistics. The distance between your stock and your new customers may add days and dollars to every delivery.

None of these is large on its own. Together they are the reason interstate budgets run over.

How long before the new site pays its own way?

This is the number that decides how much to borrow. A new site doesn’t trade at the home-base level on day one. It builds. Before you ask for money, write down three dates:

1. The date the lease or wages begin.
2. The date you expect the first revenue.
3. The date you expect it to cover its own running costs.

The gap between the first and third is your ramp-up period, and during it your home business is subsidising the new one. If the ramp-up is six months and the new site costs $18k a month to run before takings, you need about $108k of cover on top of the fit-out. A cash runway calculation makes that gap visible. A funding plan that forgets it is how a good expansion turns into a cash crisis at the original business.

Which finance fits which part of the move?

Don’t try to fund everything with one product. Split the move into pieces and match each.

Piece of the move	Often suits	Why
Vehicles, plant, machinery	Equipment finance or a chattel mortgage	The asset is the security, so the borrowing is often simpler
Fit-out of a leased site	A term loan or fit-out finance	Repayments spread over the lease term
Ramp-up wages, rent and stock	Working capital or a line of credit	Flexible and drawn only as needed
Buying the premises	A commercial property loan	Lower cost over a long term, and the property is the security
Large move with thin cash flow	Borrowing against existing property	Equity in a home-state property can back the whole plan

Banks are often the cheapest source, and if you fit their criteria a bank offer deserves serious attention. They will want to see the home business’s history and a clear plan for the branch. If your bank has said no, or can’t meet your lease date, non-bank lenders can sometimes move faster, usually at a higher total cost.

Using property you already own is common. That works across state lines. The mortgage or caveat is registered with the titles registry of whichever state holds the land, however far away the new branch is. For how that works, see borrowing against property for your business.

What does a lender ask for when the branch is in a new state?

Lenders assess the business as a whole, which works in your favour if the home operation is solid. They will typically ask for:

• Bank statements and financials from the existing business, as up to date as possible.
• A simple forecast for the new site, with the ramp-up period spelled out.
• The lease, or a letter of offer on it, if you have one.
• Evidence of demand, such as interstate customers you already serve, a signed contract, or a supply agreement.
• A description of who will run the new site, and who is covering the home business while they do.

A forecast with believable numbers carries more weight than a bold one. Show what happens if sales come in 30% below plan. If the home business can still carry the loan in that case, the application is much easier to approve.

An illustrative example

A Victorian pool and spa supplier with a profitable showroom decides to open a second one on the Gold Coast, where it already ships a steady stream of online orders. The owner budgets:

• Fit-out and signage: $90k
• Lease bond and legal fees: $30k
• Opening stock: $120k
• Six months of ramp-up (wages, rent, utilities) at $22k a month: $132k
• Licences, insurance and set-up: $15k

The total is $387k. A single loan for the whole figure would stretch cash flow. Instead the owner:

• Pays for the stock out of a stock-based facility that is repaid as it sells.
• Finances the delivery van through equipment finance.
• Pays the ramp-up costs from a credit line set up ahead of opening day, while the Victorian showroom’s statements still look strong.
• Funds the fit-out from a modest term loan.

None of those numbers is a promise; the point is the structure. Each piece of finance has an obvious source of repayment, and the one gamble, the ramp-up, is covered by something flexible. If the Gold Coast showroom takes eight months instead of six, the line of credit absorbs the difference.

What are the common mistakes?

• Borrowing the fit-out cost and nothing more. The ramp-up is almost always the bigger number.
• Forgetting payroll tax. If your wage bill is close to the threshold, a new state can tip you over.
• Assuming a home licence travels. Check before you sign a lease you can’t use.
• Asking for finance after the lease is signed. Lenders can work with a deadline, but the pressure rarely helps the terms. Arrange funding while your home-state figures are looking healthy.
• Under-insuring the people. Work out which state’s workers compensation scheme covers staff who move between sites.
• Leaving the home business short. Moving your best manager interstate may cost the original site more than you expect.

The fit-out funding guide and the guide to funding a second location go into the premises side in more detail. If the move is into a new market rather than just a new address, see funding expansion into new markets.

Unsure how much to raise? Describe the plan to us and we’ll look at the sizing with you.

Ready to put numbers on the move?

Expanding across a state line is exciting, and it’s also the stage where a bit of well-structured finance saves you from using the original business’s cash as a safety net. If you have a plan and a date, the next step is finding out which type of funding can fit it.

The enquiry form is a one-minute job, and asking doesn’t trigger a credit check, so your file stays untouched. Your information stays with us rather than being blasted out to every lender in the market. Someone on our team reads what you’ve written and rings you to talk it over. The more precisely you fill it in, with the state, the lease timing and the amount, the better the chance that the first option we raise is the one that fits.

Start the enquiry for your interstate move →