Unlock Growth with Debt Financing for Manufacturing
Why Debt Financing Matters for Manufacturers
Manufacturing is capital-intensive, requiring significant investment in machinery, inventory, and operations. Debt financing provides accessible capital without diluting ownership, unlike selling equity. It’s particularly vital for addressing key challenges:
Skilled Labour Shortages: Fund training programmes to upskill staff, tackling the demand for high-tech expertise.
Energy Costs and Sustainability: Invest in energy-efficient equipment to reduce costs and meet net-zero goals, as manufacturing accounts for over 60% of UK carbon emissions.
Supply Chain Disruptions: Secure working capital to navigate raw material shortages.
Economic Uncertainty: Whilst its feels like there is a new headwind to contend with every month, access to cash enables quicker and bolder decisions that can help improve margins and grow your business.
By using assets strategically, businesses can turn fixed resources into working capital to enhance operational resilience and fund sustainable growth.
Types of Debt Financing Suitable for Manufacturers
Manufacturers have a range of debt financing options to choose from that can be tailored to their needs:
| Financing Type | Description | Best Use Case |
|---|---|---|
| Business Loans | Fixed or variable rate loans, secured or unsecured, for various needs. | Expansion, working capital, acquisition, shareholder changes. |
| Invoice Finance | Advances -85% - 95%+ of invoice value to improve cash flow. | Managing long payment cycles, fund growth, acquisitions, turnaround or shareholder changes |
| Plant and Machinery Finance | Funds equipment like CNC’s, production lines, robotic welders, | Upgrading production capabilities without draining cash reserves |
| Equipment Finance | Covers tools, computers, or software via leasing or hire purchase. | Enhancing operational efficiency without draining cash reserves |
| Revolving Credit Facilities | Secured or unsecured facilities. Borrowers operate to a facility limit they can draw down up to repay and then redraw. | Supports working capital, used to fund large orders or opportune commercial opportunities. |
| Commercial Vehicle Finance | Finances fleet expansion, which could include the move to electric vehicles. | Logistics and distribution. |
| Asset Refinance | Releases capital from assets, up to 80% of their value. | Pulling out cash tied up in the equity of an asset to fund working capital and or growth |
| Renewable Energy Finance | Funds solar panels or biomass systems to reduce energy costs. | Sustainability and cost reduction. |
| Government-Backed Schemes | Loans via Growth Guarantee Scheme (£25,000-£2m) with favourable terms. | Security light manufacturers seeking support. |
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Case Study
Invoice Finance Facility for CAPS Systems Ltd
Wolverhampton-based manufacturer CAPS Systems Ltd, specialists in battery-handling products, has experienced a surge in orders as its reputation grows. Keen to seize this momentum and keep pace with demand, the company sought additional working capital to fund its growth ambitions.
We sat down with Managing Director Chris Smith and his team to understand the business model, their expansion plans and the pressures on cash flow. After exploring the options together, it became clear that an Invoice Finance facility would provide the flexibility and headroom CAPS needed.
A challenging four-week deadline was agreed. Working in close partnership with CAPS, their accountant and the chosen funder, we coordinated the due-diligence, structured the facility and brought everything to completion on schedule.
Reflecting on the process, Chris said:
“Due to the growth of CAPS Systems, we were looking for additional funding to match our aspirations. We sat down with Paul, who listened to our plans, kicked ideas around, and then we agreed on a plan, including a four-week timeline. With constant engagement, we met the deadline and now have the finance required to support our exciting plans – great team work throughout!”
We’re delighted to have played our part in CAPS’ expansion journey and wish Chris and his team every success with their future plans. We look forward to partnering with CAPS again as their growth story continues.
How Debt Financing Drives Growth
Debt financing empowers manufacturers to overcome challenges and seize opportunities:
Expanding Operations: Business loans fund new facilities or production lines. For example, a manufacturer might open a new plant to meet increased demand.
Upgrading Equipment: Plant and machinery finance enables investment in advanced technology, like a laser cutter, boosting efficiency and quality keeping them ahead of the competition.
Managing Cash Flow: Invoice finance provides liquidity to cover raw material costs supports growth and can be used to acquire businesses.
Investing in Sustainability: Renewable energy finance supports solar panel installation, reducing energy costs by up to 20%.
Addressing Skills Gaps: Financing funds training to develop expertise in automation, addressing labour shortages.
The Navigate Commercial Finance Advantage
At Navigate Commercial Finance, our approach is centred around understanding your business and tailoring financial solutions that align with your specific goals. With our extensive network of lenders, wealth of experience and commitment to ongoing support, we ensure that your business has the financial tools it needs to meet your strategic plan. Whether you’re looking to expand, manage cash flow, or explore new opportunities, we’re here to help you make informed, confident decisions every step of the way.
Tailored Solutions: We understand that each business is unique, and that business is not always black and white. Our network or pragmatic Asset-based lending providers structure their solutions to meet your business working capital requirements and strategic funding plans
Expert Guidance: Our team of specialists provides knowledgeable advice to help you navigate the complexities of asset-based lending and ensure that you choose the most suitable financing structure.
Key Stakeholder Relationships: We leverage key stakeholder relationships to ensure quick decision are made from those that make them
We will guide you through the process and project manage through to completion to ensure your deadline is achieved.
FAQs
Q: What’s the best financing option for my manufacturing business?
A: It depends on your goals. Plant and machinery finance suits equipment upgrades, while invoice finance helps with cash flow. Contact NavigateCF.com for tailored advice.
Q: How fast can I access funds?
A: Invoice Finance facilities can be in place within five working days to four weeks with ongoing funding supplied within 24 hours of job completion. Business loans and Revolving Credit Facilities can be in place within 48hours to four weeks depending on complexity.
Q: Will debt financing impact my credit score?
A: Responsible borrowing can improve your credit score if repayments are timely.
Q: Are there government programmes for manufacturers?
A: Yes, schemes like the Growth Guarantee Scheme provide security light manufacturers with the chance to borrow if the reason is deemed viable..
Debt financing is a vital tool for UK manufacturers to address challenges like labour shortages, energy costs, and supply chain disruptions while driving growth. Whether you need to upgrade equipment, manage cash flow, or invest in sustainability, NavigateCF.com offers tailored solutions to fuel your success. Contact us today to explore your options.
Take the Next Step
Empower your business with the right funding . Contact Navigate Commercial Finance today to discuss your funding needs .