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Funding to equip a woodworking manufacturer

Published on 16th October 2019 - Last update on 31st March 2020

£44,280 funding to buy a woodworking machine 

The latest generation of production tooling offers increased precision and productivity - thanks to ever-more sophisticated technology. With the rise of machines that monitor the work and adjust themselves, accuracy and production throughput are reaching new levels - but so are the costs. CNC production tooling will command a high price - but many manufacturers now recognise that its advantages make it essential. Even sectors - such as woodworking - where a traditional ‘low tech’ approach has been possible, are now adopting production automation.   

This means that the traditional woodwork operation, which relies on hand-finishing and craft skills, may have no alternative but to invest in sophisticated production systems.

Asset Funding solutions can often provide the most cost-effective solutions to help you provide the equipment you need and includes solutions to let you buy outright or lease items of all kinds. 

We were recently approached by a furniture manufacturer based in Berkshire who had recently taken over the family business when its previous manager realise that the time had come to retire. 

“We are in the heart of the traditional chair making region, and we could trace the business back to the 19th century, when a craftsman would spend a day in the woods making the spindles for a chair from green wood that he had just cut. We can’t afford to spend that time to produce a chair these days - even if they look very similar. We are making upwards of 100 a day, and I needed to get the production volumes up if we wanted to stay in business for another century.”

He had looked at the factory and saw that his equipment had seen better days. He planned on a steady programme of replacement, but he realised that there was a real bottleneck in the production process.

“Making complex components by hand takes time. Using a 4 axis CNC-controlled router can not only get the component - which can be as large as a boardroom tabletop - made faster, it can do it to accuracy that hand work simply cannot compete with. The costs come right down - but the big obstacle is the cost of buying the machine - and the control systems that go with it.”

He found a supplier ready to provide and install the machines he needed - but the total cost of the new equipment came to £44,280.

He wanted to spread the cost with Hire Purchase - but he was concerned that the finance plan offered by the dealer - with an interest rate of 15% - was expensive. 

He turned to our finance team at Rangewell.

Asset Finance and your business

Asset Funding can be the most cost-effective way to provide funding for equipment of all types - including funding for woodworking machinery.

It differs from a straightforward loan in one simple respect - the security for the loan is provided by the equipment itself. This means if your business is unable to repay the funding, the lender can simply repossess the equipment and sell it. As a result, the risk to the lender is much reduced - which, in turn, means that the rate offered to you as a borrower may be reduced too. 

Hire Purchase can be the simplest form of Asset Finance. With Hire Purchase, you effectively hire equipment until you’ve paid enough to purchase it. This normally requires you to pay an initial deposit followed by fixed monthly repayments. When you’ve made all the repayments, your business will own the equipment outright - making Hire Purchase ideal for durable items that you will want to keep and use for the long-term.

Leasing is an alternative that allows you to finance assets without buying them. This allows you to regularly update equipment and, in some leasing arrangements, you have the option to own the asset at the end of the term, upgrade it, or simply give it back. You can also decide whether you want maintenance and insurance to be included and whether you need the item for its whole working life or a shorter, agreed period.

Asset Finance can also provide funding for used machinery. There are many lenders providing Asset Finance, but Rangewell’s expertise can help secure the most competitive rates - frequently undercutting those offered by equipment dealers. 

The challenge

Asset Finance is a routine type of business funding, and can usually be arranged quickly - especially for borrowers with an established business. However, although our client had a business with a record of profitability that went back years, his own credit history was less than perfect. He had missed some loan payments in the past - and as he had been running the business for only a short while, lenders saw his personal history as a red flag.

He approached Rangewell to provide a solution.

Rangewell found a specialist Asset Finance provider which could provide the £44,2800 funding at a preferential rate of 12% above base rate over 5 years. The looked at the value of the machine and the profitability of the business rather than at the client's credit history - which may be unavoidable with less specialised lenders

The funding Rangewell arranged:

£44,2800 over 5 years at 12.75 %

Monthly repayments £983 or Annually £11,796

The process was simple and - because we were able to approach lending specialists at who understood the manufacturing sector - it was arranged in the minimum time.

At Rangewell, we help businesses of all kinds find better answers to all their funding needs. Our expert teams find the most appropriate funding solutions while our network of lender contacts and our unique online tool let us find the most cost-effective rates. Simply call us at Rangewell on 020 3637 4150 - or email [email protected]

Our service is independent, fast and absolutely free.

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