Sources of finance for Manufacturers

If you run a manufacturing business, getting the right finance at the right rate can be challenging, this post may help you to understand what types of finance products are available to support you, we explore short term & longer term funding needs:

Short term solutions for day-to-day working capital

Working Capital Cash flow Loans

These are usually simple to access, sometimes with instant offers. As they may not be the lowest-cost option, they should only be used until better rates can be obtained.

Even the most successful businesses can face challenges when cash is tied up in everyday expenses. These expenses, known as Working Capital, can sometimes require short term funding. If you’re looking to ease your cash flow or access finance to keep things running smoothly, a Working Capital Loan could be a good solution.

Invoice Finance

Is a flexible financing option, either for a single customer or for your whole sales ledger. It’s best suited for manufacturers who deal with repeat customers and those with a strong credit profile.

For B2B companies facing any cash flow challenges, invoice finance can be a great solution. It allows your business to access cash from unpaid invoices, helping to speed up your payment cycle.

Instead of waiting 30, 60, or 90 days for your customers to pay, (which can be a problem if you work for very large companies) you can receive a percentage of the invoice upfront. This enables you to bridge the gap between invoicing & receiving payment, resulting in a healthier cash flow for your business.

Revolving Credit

Is a flexible credit facility, similar to an overdraft. It gives businesses access to a pre-approved amount, which can be drawn upon when needed, and repaid when not. Interest is charged on the outstanding balance.

It can give your business the same flexibility as a credit card, but at a lower cost.

If you need to replenish new stock, or just need a cashflow injection, a Revolving Credit Facility can give you access to cash when you need it. You have the ability to dip in and pay back your facility as and when your business needs that cash injection, putting you in control of your finances.

Longer term facilities to fund investment into equipment or projects

Asset Finance

Can be used to finance machinery, equipment and fixtures that are usually repaid over a set term, with a fixed interest rate.

Instead of paying a large sum up front, you can spread the cost over time with manageable monthly repayments. This type of funding is secured against the asset itself, which reduces the lender's risk and often results in lower interest rates compared to other business loans.

It's an ideal solution for businesses that are willing to grow, but lack the upfront capital to invest in new equipment. By financing assets this way, you can continue to expand your operations without straining your working capital.

Term Loans

These are simple products that can be used for many purposes. The availability and terms of these are dependent upon credit scores.

A term loan is a loan from a bank for a specific amount that has a specified repayment schedule and a fixed or floating interest rate.

You as the borrower repay the loan in regular installments over the agreed-upon term, which may include both principal and interest.

Property Finance

These loans such as commercial mortgages can be suitable if you are considering purchasing space, rather than renting. They usually have much longer-term repayment periods. The value of the property, along with the applicant’s credit score, are considered by underwriters when deciding the terms of the loan.

Business Property Finance has become a staple form of funding, that now features in almost every commercial property purchase or redevelopment project.

These bespoke financing options are designed to help businesses and developers to quickly access the funds needed to buy various different types of commercial property, until they are sold on, rented, or refinanced under a more traditional loan or mortgage.

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