Finance for Recording and Reproduction

The recording industry has gone through a series of technological revolutions, with analogue and tape being replaced by digital audio workstations, and vinyl, CD and DAT being replaced by downloads and streaming.

But although the technology continues to change and improve, the industry still depends on delivering the highest possible quality reproduction to customers. It may be possible to capture a performance on a laptop with suitable software and microphones - but most commercial recordings will still take place in a fully-equipped studio, and building and equipping a professional studio will require a major investment.

At Rangewell, we can help you find solutions to your funding needs - not just for your recording equipment, but for all the needs of your recording business.

Understanding your funding options

You may need to find the right type of funding option to allow you to:

• Acquire equipment and assets - including soft assets
• Acquire premises
• Set up a new recording business
• Provide working capital
• Finance growth
• Deal with tax

Funding your equipment

If you are planning a professional studio, rather than a hobby recording facility, you will need a long list of equipment:

• DAW Software
• Audio Interfaces
• Headphones
• Studio Monitors
• Microphone Cables
• Microphone Stands
• Pop Filters
• Condenser Mics
• Dynamic Mics
• Ribbon Mics
• Reflection Filters
• Monitor Isolation Pads
• Mixing Desks
• Audio Cables
• Studio Monitor Stands
• Studio Rack Mounts
• Power Conditioners
• Microphone Preamps
• Headphone Amps
• Monitor Management
• MIDI Controllers
• Electronic Drum Kits
• Control Surfaces
• Uninterruptible Power Supplies

Even with the most basic specification, costs will run into tens of thousand of pounds. This cost need not be an obstacle to your plans. Asset Finance - Hire Purchase and Leasing - can help make virtually any type of equipment you need affordable by allowing you to spread the costs and make monthly payments.

Asset Finance works by using the equipment or ‘asset’, the security for the loan itself. This means that if you were unable to repay, the lender could simply repossess it. This reduces the risk to the lender and consequently the cost that you pay. There are several types of Asset Funding:

Hire Purchase

Hire Purchase (HP) lets you spread the cost of buying the equipment you need with arrangements generally last between 6 and 60 months. You pay a deposit plus fixed monthly instalments for the agreed term, after which the assets become yours.

Equipment suppliers will frequently offer HP deals to help them secure a sale. These may seem attractive - but can include hidden costs which push up the real price you pay.

At Rangewell, we can often help set up HP agreements that undercut those of equipment suppliers, or which let you take advantage of the lower costs of pre-owned equipment.

Finance and Operating Leases

Finance and Operating Leases work like rental agreements and let you spread the cost of equipment with no upfront payment. This type of finance could be the best option for equipment which will have a limited life. You can simply return it to the finance house at the end of the lease, leaving you free to update to the latest technology. This may be particularly appropriate to the recording sector, where the pace of technological change is rapid, and being forced to use older equipment can compromise your quality.

‘Soft assets’

Soft assets include vital items such as soundproofing which are essential for your studio - but which can be very difficult to finance. Conventional Asset Finance is geared towards ‘hard’ assets such as microphones and mixing desks, which are relatively easy to sell on, and so preferred by most lenders.

But at Rangewell we can help find lenders who can provide finance for soft assets.

Funding for premises

Your recording studio will need premises. An office will be essential, as well as studios and editing and technical space. The ideal studio location must be easy for clients to find, with good parking and good transport links, and will probably need to be in use outside normal working hours.

While it may be possible to set up in a shared technical space, the need for soundproofing may restrict the choices available to you. You will need to budget for conversion of the bare space to your particular needs. You will also have additional costs, including power and business rates to budget for.

We can help you find the solutions for your premises leasing needs.

Renting may be unavoidable in the early days of your business. However, renting premises restricts what you can do with your space, and means ongoing costs, and puts your business at risk of rent increases. Buying premises with a Commercial Mortgage could be a sound investment, as it could allow you to plan your facilities without compromises.

You’ll need to think about how you will structure your business. A limited company or a partnership may be the most appropriate foundation for the future. The costs involved for incorporation are minimal.

Setting up or buying a recording business

If you are ready to set up your own recording business, remember that you will need funding for operating expenses and marketing as well as equipment and premises.

Funding for start-ups can be difficult to obtain from the majority of lenders, who will prefer to work with businesses which can offer a trading history and evidence of profits as a basis for their lending decisions. However, if you have a sound business plan and experience within the sector we may be able to help you find lenders who can help. Start-up funding usually takes the form of a Secured Loan, with the security provided by an asset such as your home, although smaller sums may be available with an Unsecured lending arrangement.

Buying an existing recording studio business - whether as a partner buy-in or a complete buyout - could offer an established revenue stream and a proven business model. Finding lenders willing to help may be simpler as a result.

However, the costs may be very substantial, depending on its current turnover, the potential it offers, the assets it already has and the skills and qualities of the staff.

A Secured Loan could help you to borrow the large sums required for a buy-in or buyout. You might also consider ‘Jigsaw’ funding. This is a bespoke finance package, made up of a number of loan types to provide the most appropriate funding for each item you need to finance.

Working Capital Finance

Working Capital Finance can help you stay afloat and pay staff and suppliers during the early stages of your business. It is designed to provide the operating expenses, from staff costs to supplier bills while cashflow is slow. It is usually designed to be repaid in the short- to medium-term, once your recording business is fully on its feet.

Growth Finance

Large-scale finance can be vital if you have major plans such as acquiring a competitor. Growth Finance can help. Lenders may require an established trading history and record of profits, but it may be possible to arrange Growth Finance based on your profit projections, rather than on your trading history.

Revolving Credit Facilities

Overdrafts are a well-known form of business finance, but banks may be reluctant to provide them. Revolving Credit Facilities can be an alternative, providing a line of credit, with an agreed limit that you can call on when you need it. You only pay for the money you take out, so it can be a cost-effective way to raise funds if you need them.

Find out more about ways to smooth your cash flow with Rangewell.

Invoice Finance

There are various revenue models that your recording business might adopt. If your income stream is based around corporate sources, you may find that there are restrictions on your cash flow as a result of late payments. An Invoice Finance arrangement can bring you cash as soon as you issue an invoice, providing a flow of revenue that keeps pace with the amount of business you do.

Find out more about Invoice Finance.

Tax Loans - helping deal with demands

Whatever your revenue stream, you will face substantial quarterly VAT or annual tax demands. These 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
• Fixed monthly payments
• Quick and simple to arrange
• Avoids issues with HMRC, potential penalties and professional liabilities

Find out how a Tax Loan could help you smooth your tax flow.

Mezzanine Funding

Many lenders will simply not be able to lend you sufficient funds for the major costs involved in building a state of the art recording studio complex.

Equity funding could provide the scale of funding you need. There’s nothing to repay because you are basically selling a share in your business. But it can mean losing control of your company – and it will certainly mean sharing all future profits with your investors. Equity investors make their return from your growth.

Mezzanine Finance can provide a third way to raise funds. A lender will provide the funds, secured on the future of your business. They will be able to offer a relatively high level of funding, but you will need to repay their debt and 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.

How we help you capitalise your recording business

At Rangewell, we work with businesses throughout the media sectors. We understand the recording industry and the potential it offers, as well as the challenge you face.

We can use the expertise we have built up to 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 need or require a ‘Jigsaw’ funding package made up of a combination of products, we can work with you to find the answers that are right for your business plans.

Call us now to get our experts working for you and the future of  your business.