The Finance and Loan options available for the manufacturing industry

manufacturing

Manufacturing produces virtually every type of product that you can think of, from smartphones to hair gel, and everything in between. UK manufacturing is often unfairly maligned, but the UK is actually the eighth largest manufacturer in the world, contributing £224 billion to our economy and employing 2.6 million people. The industry’s importance is undeniable, but manufacturers face a host of challenges that frustrate the sector’s growth.

For instance, the UK’s commitment to reaching net zero requires organisations to significantly reduce their carbon emissions, which are typically high for manufacturers because of the energy needed to power processing and production equipment. At the same time, global supply chain disruptions, caused by overseas crises, are causing a shortage of parts and raw materials. A UK skills shortage also means that many manufacturers struggle to recruit the talent needed for operating factories. Finally, persistently high energy prices and inflation have driven up almost every imaginable cost for manufacturers, from production to distribution.

These challenges have clear solutions that will deliver benefits over the long-term, including increasing automation, powering factories using renewable energy, upgrading to more modern and efficient machinery, and transitioning from fossil-fuelled fleets to cleaner electric models – but these all require significant capital investment.

While there are government schemes to take some financial pressure off manufacturers, such as the annual investment allowance (AIA) and 100% first year allowances, many manufacturers and engineering companies will still seek external capital to help them invest in modernisation to create more efficient and sustainable operations for delivering growth.

At Origin Finance, we’re passionate about seeing the industry succeed. We want to give manufacturers access to the funding they need to meet their growth objectives, so in this article we provide an overview of manufacturing finance, giving examples of what can be financed, as well as answering other commonly asked questions.

What is manufacturing finance? 

Manufacturing finance refers to the finance options available for manufacturers and engineers who are looking to fund their operations. It can be used to finance every aspect of production, from planning at head office to assembly and testing at the factory to the distribution of products to end users.
There are various types of finance and loans available, so below we give an overview of some of the most common funding solutions.

Business Loans for manufacturers 

Business loans offer manufacturers a straightforward way of arranging a loan that has a manageable, fixed rate of interest. They can be used to fund a great variety of things, from expansion and modernisation projects, to helping you buy a business or move production facilities, or even just to ease cash flow.

Invoice finance for manufacturers 

Invoice finance helps manufacturers release capital from their outstanding invoices, which is particularly useful if customers are late with payments. Lenders will typically send you advanced payment of around 75%-85% of the value of your invoice.

The advantage of invoice finance is that it immediately unlocks capital from what your customers already owe you, allowing you to fund your next project. It’s a helpful option for businesses seeking a stable cash flow.

It can be done discreetly so that your customers don’t know you’re using invoice finance. There are even options for lenders to collect the payment on your behalf if invoices remain unpaid.

Plant and machinery finance for manufacturers 

Plant and machinery assets are vital for manufacturing operations, but they’re also a great expense for most organisations. Not only does technology become more advanced, catering for modern production needs, there is also pressure on all businesses to ensure that machinery is energy-efficient and sustainable.

The great news is that plant and machinery finance can fund a lot of manufacturing requirements. Examples of what plant and machinery finance can fund include:

  • Assembly lines
  • Plastic injection moulding & tooling
  • Hydraulic presses
  • Turning machines and lathes
  • Laser printers
  • Laser etchers
  • Milling machines
  • Robot welders
  • Drills
  • Quality testing machines
  • Packaging machines
  • Overhead cranes
  • Sandblasting machines

This list isn’t exhaustive as neither ‘plant’ nor ‘machinery’ have definitions that are set in stone, so it’s always worth discussing your needs before you make a purchase as you’ll be surprised at what you can finance. The chances are if you need it for manufacturing, we’ll be able to find funding for it.

What’s also great about plant and machinery finance is that it can cover installation costs and tooling, which is particularly useful when acquiring complex machinery. We can also fund stage payments to your suppliers.

Equipment finance for manufacturers 

There are several options for manufacturers looking to acquire specialist equipment through leasing, hire purchase or buying it outright. Examples of equipment that can be financed include handheld machining equipment, planers and shapers, or power tools such as drills and grinders, as well as essential office equipment like computers and printers.Like plant and machinery finance, equipment finance (also known as asset finance) covers installation. It can also cover intangible items (websites, logos, etc), so it’s worth letting us know your plans, and we’ll be able to provide further detail on where we can support you with equipment financing solutions.

Fitout finance for manufacturers 

Fitout finance allows you to fund fitouts for your office, job shop, factory, warehouses, or any other facility needed as part of your production or administration operation.We’ve helped manufacturers finance all sorts of fitouts, with examples of funding including heating, ventilation, and air conditioning (HVAC), dust extraction equipment and mezzanine floors.

New start finance for manufacturers 

Finance isn’t just available for established manufacturers, it can also be secured for new businesses looking to set up production. With a solid business plan, it’s entirely possible to receive finance to help you get your facilities up and running. We’ve helped a host of new manufacturers with new start finance. For example, we’ve helped an engineering startup find funding for a used computer numerical control (CNC) machine along with its operational software. 

Commercial vehicle finance for manufacturers

Whether you’re looking to expand your transportation fleet, or upgrade to electric to reduce carbon emissions, commercial vehicle finance can be used by manufacturers to buy vans, trucks, cars, or other vehicles.

Refinance for manufacturers 

Manufacturers can refinance their equipment and machinery, including vehicles, to release working capital back into the business. As manufacturing equipment is often of high value, this can be a useful option for increasing cash flow. You’ll generally receive around 80% of the value of your asset and you’ll still own and be able to use the equipment for production as normal.

Renewable energy for manufacturers 

With high energy costs and climate-change regulations, investing in renewable energy is a no-brainer for manufacturers. This can be deployed through rooftop solar panels or by using biomass as a replacement for fossil fuels. Some may even be in a position to consider wind and hydroelectric solutions.

We’re able to secure finance to help pay for this renewal energy equipment, helping your business reduce carbon emissions while also contributing to long-term cost savings.

With high energy costs and climate-change regulations, investing in renewable energy is a no-brainer for manufacturers. This can be deployed through rooftop solar panels or by using biomass as a replacement for fossil fuels. Some may even be in a position to consider wind and hydroelectric solutions.

We’re able to secure finance to help pay for this renewal energy equipment, helping your business reduce carbon emissions while also contributing to long-term cost savings.

What manufacturing industries can get finance and loans? 

Every manufacturing sector can apply to receive finance and loans. Examples include construction materials, petroleum, chemicals, food, wood, metal, motor vehicles, electronics, textiles, batteries, cosmetics, plastic, home appliances, pulp and paper, jewellery, agriculture…the list is endless, as there are no industry barriers to securing funding.

How can Origin Finance help? 

For years, we’ve been working with startups and well-known manufacturers to help them secure the funding they need to finance their production operations.

We’ll save you time by researching the available finance and loans to connect you with the most suitable lender for your needs, safeguarding your credit rating. 

As experts in the field, we have access to specialist Lenders who only deal with applications from brokers. We’ll support you through the application process to ensure that you avoid accidental errors and that your application is as strong as possible.

Get in touch for a free, no-obligation quote today.

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