Manufacturers on a global scale require funding for large assets, digital technology, and new equipment which speeds up the process. How do you source funding for new assets? This article explores the options.
The manufacturing industry is asset rich – expensive asset rich. Finding financing to buy bigger, better machinery is a challenge many SME production focused companies face. If you want to increase production in a factory you need to increase the capacity limitations of your heavy machinery. Newer models might use less power, produce faster results, or be digitally enhanced for your convenience. Older assets use more electricity, operate at slower rates, and contain bugs which were never fixed, but put up with. Finding funding to update the assets your manufacturing business uses is not just a luxury; it is an imperative.
Finding Funding in Manufacturing
So where do you find that finance? These funding source explanations might help you to have a firmer grasp on what it means to borrow money in the world of asset financing.
Manufacturing Grants
Depending upon the region your business operates in, you may be eligible to an equipment financing grant. If you live in the UK, arm yourself with an expert legal advisor with experience in manufacturing grants. By using a legal intermediary to source new funding, you have an expert advisor who can represent your interests while you get on with the difficult daily grind of running your business.
Hire Purchasing
Hire purchasing is a form of asset financing which broadly reflects the whole method. You agree to buy your assets from the seller. You then agree to pay in instalments, which both parties must arrange between them. Once you pay in full plus interest, you own the item.
Asset Financing
Asset financing allows you to use assets that you already have as insurance against your repayment of the loan. You could pay for a new robotic arm for the production line by using the value of the old one as insurance that you won’t default on your loan.
Crowd Funding
The modern, catchy branded business can always try crowd funding for resources to buy new assets. If you have enough followers try asking them to help you with funding. Provide a promised reward such as a discount voucher instore and watch the clients raise money on your behalf. Kickstarter is a great resource here.
Finance Loans
Finance loans are the old fashioned way of borrowing money as a business. You approach a funding source such as a bank or building society, and you show them your business plan. You explain why you need the money; they approve or reject you, and you get the equipment you need with a repayment plan in place.
Private Investors
Private financiers are usually former entrepreneurs with successful businesses behind them. These types of financier will lend you the money on a business loan basis. You will pay them back overtime. The interest may be slightly less than you would pay for a bank loan. However, some investors might want a share of your business in exchange for money.
Different Businesses Suit Different Funding Models
Your business may not have a ‘normal’ brand. Newer startups with large online followings suit the crowd funding style, while large factories with heavy machinery and AI run robotics may better suit asset financing to pay for new equipment. Find the right funding source for you and you will never be short of finance again.