Finance for High Value Manufacturing
The funds you need to work at the cutting edge of manufacturing
- Rates from 6%
- Spread costs over 6-60 months
- We can often undercut ’0%’ deals from equipment suppliers
- Balloon payment options - reduce monthly outgoings
- No capital costs
- Acquire any type of equipment
- Easy to update equipment
- Asset refinance available
Large scale funding
- Equip entire production line
- Equity finance
- Mezzanine finance
- Secured finance
The UK is a major competitor in the global manufacturing economy.
The sector of manufacturing generating the highest value is High-Value Manufacturing (HVM) and provides in the region of £275bn to the UK economy. It demands a high level of expertise and funding - but SMEs have a key role to play across the sector.
High-value manufacturing is the application of leading edge technical knowledge and expertise to the full cycle of activities from research and development, through design, production, logistics and services, to end of life management.
HVM sectors include:
- Food and Drink
- Marine Transport
- Motor Vehicles
- Sports Goods & Games
- Printing & Paper
- Fabricated Metal Goods
- Rubber & Plastics
- Chemicals & Chemical Products
- Machinery & Equipment
- Nuclear Power
- Metal & Castings
- Electrical Equipment
- Computers & Electronics
- Optical Products
New technologies of all types, new materials and new production techniques are at the core of HVM. Succeeding in HVM, therefore, means investing in knowledge and R&D as well as straightforward manufacturing. Your HVM business will need not just to embrace but in some cases to create new technologies, call on technological and academic expertise, and set up advanced production. Finance will be essential at every step.
High street lenders still find it difficult to support experienced manufacturers with conventional products and approaches. At Rangewell, we know the new wave of specialist business-focused lenders who can provide funding for the HVM sector.
Your funding options
There are many finance options to consider, including various grants. However, getting the right type of
funding is vital to keep costs under control, and to give your HVM business the flexibility it needs.
The right funding option can help you:
- Set up a new HVM business
- Buy into an existing HVM business
- Acquire intellectual property
- Acquire equipment and assets
- Acquire premises
- Provide working capital
- Finance growth
- Deal with tax
Set up a new HVM operation
If you are ready to set up an HVM operation as a new venture, or as a new division of an existing business, your own skills, knowledge and business contacts are all valuable assets.
So is a sound business plan, backed by a detailed understanding of the technology involved and the potential markets. You will need premises, design and development teams and ultimately, production equipment and staff. Working capital will be vital. Even if you are in the fortunate position of having a full order book when you start your business you will need working capital to run the operation until payments start coming in.
Many traditional lenders find it difficult to fund businesses which can’t demonstrate an existing record of success. This is made worse in HVM, where lenders may have little or no experience of the potential or the challenges that must be overcome to reach it.
At Rangewell we can help you find financial solutions from lenders who can share your vision, and who can help you find the funding you need to set up a new HVM business.
Find out more about Start-Up Finance for HVM businesses.
Buying an existing manufacturing business
Buying an existing HVM business can be an attractive alternative to setting up. Depending on the business you want to acquire, it could offer products that have been developed and productionised, existing production facilities and even distribution and a customer base. The value of the business may depend on its turnover, the assets and production plant it already has, but as with any profitable business, the cost of acquisition may be high.
There are a number of ways to raise the necessary funding. A Secured Loan could be one answer, while another is ‘Jigsaw’ Funding. This is a bespoke finance package, made up of a number of loan types, such as Asset Funding for plant and equipment, Commercial Mortgage for the premises, with other lending to cover goodwill.
Find out more about funding for Buy-ins and Buyouts.
Acquire intellectual property and intangible assets
Intellectual property can range from brands and trademarks to patents and research material. HVM depends on state-of-the-art knowledge, and simply buying in the necessary know-how can provide important advantages, reducing time to market and providing certainty of techniques.
Intangible assets can be financed in the same way that tangible assets such as production equipment or vehicles can be financed Those lenders who work in the field may be able to consider funding options, secured on the assets themselves, offering a cost effective way to fund the assets your business needs.
Arriving at a fair valuation for an intangible asset will, therefore, require specialist skills. A detailed valuation report will need to be prepared by independent experts in areas such as marketing or patent law depending on the nature of the asset.
Intangible asset lenders will be able to work with you to provide this report and an assessment of the value of the asset to you and your business, as well as on the open market.
Find out more about funding solutions for Intangible Assets.
Mezzanine Funding for large-scale needs
Lending may not be able to provide sufficient funds to buy an existing manufacturing business, acquire a factory or fund a large production line.
Equity funding from an investor could provide the necessary funding required, but it would mean sharing all future profits with your investors and could lead to the loss of control of your business.
Mezzanine Finance can provide a solution. A mezzanine lender will provide the funds you need, secured on the future of your business. They will offer a high level of funding, which you will need to repay with interest charges - if you fail to repay, they will have the right to take an agreed proportion of equity interest in the company.
Find out more about how Mezzanine Finance can offer a high level of funding.
Acquiring production assets
You may be able to set up a basic assembly-based manufacturing business with little more than basic hand tools, but HVM businesses are typically not ‘screwdriver’ operations. Manufacturing will demand a wide range of machines, and these may include custom builds for new manufacturing processes.
Batch or continuous production may also require robots and automated production equipment. Costs will depend on the processes you need – a simple automated welder will cost a few tens of thousands of pounds for mild steel, but considerably more if you need the same components in magnesium or titanium.
New and exotic materials may even need new types of production machinery developed to work them.
Developing new production machines might require a loan or even grant funding, but Asset Finance - Hire Purchase and leasing - can help put virtually any type of conventional production equipment within your reach.
Hire Purchase or HP
HP lets you spread the cost of buying the equipment you will use for the long term.
Arrangements generally last between 12 and 72 months. You pay a deposit plus fixed monthly instalments for the agreed term, after which the assets become yours. Smaller items, such as workbenches, tools which will go on giving service for years, such as spraybooths or versatile basic tools such as pillar drills, may be suited to HP arrangements
Equipment manufacturers and dealers will often offer HP arrangements. These can sound very attractive, and can even include 0% finance options. At Rangewell we have found that there can actually be hidden costs. You may be able to save money by arranging finance yourself.
See how we can help you beat 0% finance deals.
Finance and Operating Leases
Leasing can allow you to spread the cost of production equipment with no upfront payment - whether you need a few machine tools or a complete production line.
You pay for your equipment from the income it generates each month.
When equipment becomes obsolete, or your production process changes, you can simply return it to the finance house at the end of the lease. This makes it simpler to adopt the latest technology - helping your business maintain a competitive edge.
Find out more about Asset Funding.
Refinance existing assets
The production equipment that your business already uses represents a huge investment. Asset Refinance lets you call on the value of an existing asset, while still having full use of it. The finance company will buy the asset from you, providing you with a cash sum. You then buy or lease the asset back, under a new finance arrangement.
You can use Asset Refinance to release cash, or to replace existing finance deals to reduce your monthly outgoings. Find out more here.
Funding for premises
Whether you need a workroom or a fully-fledged factory, you will need premises. An office will be essential, and you may need warehouse and depot space.
Leasing a suitable industrial unit can provide the simplest option. We can provide solutions for the deposit you would need if you want to lease your premises.
However, once established, your business might be able to buy suitable premises with a Commercial Mortgage. It can help decrease your monthly outgoings, and provide your business with a valuable asset for the future. Premises can provide security for lending if you wish to borrow more funds in the future
Find out more about a Commercial Mortgage.
All manufacturing businesses can face issues with cashflow, and the problem may be particularly acute in the HVM sector, where long development times can delay production and profitability.
We can provide a number of solutions to help you bridge the cashflow gap.
Revolving Credit Facilities
Overdrafts are a traditional form of finance you might expect from your ban, and allow you to call on funds as you need them. However, since the credit crunch, banks may be reluctant to provide overdraft facilities at all, and rarely to the scale you might need as a manufacturer. Revolving Credit Facilities can provide an alternative, providing a line of credit from a lender, with an agreed limit that you can call on when you need it. You only pay for the money you take out for the time while you are using it.
Find out more about Revolving Credit Facilities.
Working Capital Finance for your HVM
Working Capital Finance can help you pay staff and suppliers while you are waiting for payments from your customers. It is designed to cover your operating expenses, from staff costs to supplier bills at times when revenue is short is usually be repaid in the short- to medium-term. It can be particularly suitable for the early stages of your operation.
Find out more about Working Capital Finance.
Invoice Finance for your HVM
In many sectors, customers expect 90 days credit - while suppliers are more likely to demand immediate or even upfront payment.
Invoice Factoring and Discounting can help ensure payments keep pace with the work you do, providing payment as soon as products are delivered and an invoice issued.
You can get 90% of invoice value when you bill your customers, with cleared funds in your account the day after you invoice.
The level of funding you can call on will grow with the level of your invoices – making it ideal for funding growth.
Find out more about Invoice Finance.
Growth Finance for your HVM
In HVM as in other sectors, when your products prove successful you will want to increase your manufacturing capacity. This expansion will almost certainly require finance.
But most lenders will only base their lending on your past performance. Growth finance can help and is a special type of lending designed to finance growth. While most forms of lending are based on your trading history and record of profits, but it may be possible to arrange Growth Finance based on your profit projections, coupled with a detailed business plan.
Tax Funding for your HVM
Quarterly VAT or annual tax demands can cause serious problems with your cash flow. Tax Loans help you to spread the cost of your tax demands into affordable monthly payments.
- Better control of cash flow
- Predictable monthly payments
- Quick and simple to arrange
- Avoids penalties
Find out how a Tax Loan could support smooth cashflow.
WHAT WE CAN DO
Help arrange funding to let a scientific instrument company begin production of their own designs
Find the most competitive loan to let three partners acquire a niche pharmaceutical company
Help find finance for an automotive component company to buy a 3D printer
Source a commercial mortgage to allow an electronics manufacturer to buy the freehold of its factory
Help find funding for an aerospace fabricator to acquire an autoclave for a large carbon fibre production run
Basic business loans for your HVM
With any business, there will be additional expenses and, although specialised loans and funding can provide answers for specialised needs, there may still be a need for basic business lending for your HVM.
There are two types of basic business lending, which can be used for any business purpose. Unsecured business loans can be suitable for smaller sums and usually allow you up to 5 years to repay.
Secured loans are ‘secured’ because the lender will require security in case you cannot pay the loan back. This could be your home or your business premises. They can be used to borrow large sums of money, of £250,000 or more.
How we help you capitalise your HVM
At Rangewell, our experience across the manufacturing industry works for you and your HVM.
It lets us help you find the financial solutions you need to capitalise your business, whether you want to fund capital expenses, working capital or growth.
As well as conventional finance products, we can help you find Alternative Funding, using new loan providers and styles of funding. We know the lenders who can offer the most competitive rates for the sector. Whether you have a straightforward finance need, or require a complicated ‘Jigsaw’ Funding plan made up of a combination of products, we can work with you to find the answers that are right for you.
Helping you build your profits
Finance for HVMAny type of production machinery will mean high levels of investment. HVM can mean even higher costs if custom machinery is required. We can help you find the funding you need, often without capital expenditure.
Support your cash flow with Invoice FinanceInvoice finance can help ensure that payments from customers keep pace with your production output.
Asset funding reduces riskIf you were unable to repay under an asset funding agreement the lender could simply repossess the equipment to cover their loss. No other assets are at risk.
'Jigsaw' funding for your HVMA single type of finance may not be enough for many HVM business plans purposes. We can help you set up jigsaw finance - with the most appropriate type of finance for each particular need - to help you build your business.
Funding for major costsMezzanine finance can provide affordable funding for major projects.
Specialist funding for start-up and growthSecuring funding for startup and growth in the HVM sector can be challenging. We can help you find solutions.
Download Rangewell’s free and detailed guide to Finance for Manufacturing
What types of finance are there - which do you need?
Why not all providers are equal - finding the one that’s right for you
The downsides to finance - and how to avoid them
How to arrange finance - what paperwork do you need?
Key terms explained
Getting the right funding arrangement is essentialThere are many forms of business finance available. Getting the most appropriate type for your particular needs is essential to avoid excessive costs.
The costs of Asset FinanceInvesting in new machinery with asset finance will mean repaying from month one. Turnover may not increase immediately, which may leave you with a cash flow issue.
Long-term financial commitmentsYou may not be able to pull out of a finance arrangement once it has been set up.
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