Finance for Textiles and Clothing

The British clothing industry has always enjoyed success, based on the design flair of British designers. However, the wider textile manufacturing industry has been in a long decline for more than 60years. This has been reversed - and the UK is becoming a major textile manufacturer once more.

New fibres and advanced new machinery may be part of the story - but even cotton manufacture has returned to the UK. Increasing costs of imports, shorter delivery times and growing demand for British made materials are all supporting the recovery.

How can you share in the recovery of the textile industry?

Textile engineering today is no longer a labour-intensive industry. Modern machinery has allowed automated high volume production. Setting up or growing a UK textile business requires sophisticated machinery at every stage of the production process. Spinning, weaving, knitting and finishing can all be carried out in greater volumes and at higher speeds with the latest equipment. New techniques such as digital printing and foam dyes allow new techniques. Even traditional fabrics such as cotton benefit from new technology, such as Bioenzyme treatment to reduce environmental impact.

The possibilities are exciting. However, they mean that to share in the recovery of the textile industry, you will need substantial investment in machinery and premises. At Rangewell, we know the challenges you and your textile manufacturing operation face - and we know the financial solutions that can help provide the equipment you need.

Your funding options

You may be able to set up a small clothing business with basic cutting and sewing machines, but a fully automated modern textile production line could mean an investment of millions of pounds.

Fortunately, there is a range of funding options which can help you finance the equipment you need:

• Asset Finance
• Grant Funding
• Borrowing
• Commercial Mortgages
• Cashflow Funding

Asset Finance

Asset Finance is a blanket term for hire purchase and leasing arrangements, which can let you spread the cost of equipment. The funding is secured on the equipment (or assets) themselves, reducing the risk to lenders, and so letting them cut the costs to you.

These solutions can help you acquire virtually any type of tool or production equipment.

Hire Purchase – buying your production equipment outright

Hire Purchase offers a straightforward way to spread the cost of equipping your production operation. You will need to put down a deposit, typically between 5%-25% of the total price, and repay the remainder, together with the interest, over an agreed period of up to 60 months.

You pay a fixed rate of interest and agreed monthly payments, making budgeting simple.

You may also have the option to structure your payments to fit your projected cash flow. For example, you can secure lower monthly repayments by agreeing to pay a final lump sum, known as a balloon payment, at the end of the loan period. This will mean that your equipment has had sufficient time to generate the funds to pay for itself when your production is fully operational.

Equipment manufacturers and dealers will often offer HP arrangements during the sales process. These can look very attractive, and can even include 0% options. At Rangewell we have found that these deals can usually mask hidden costs. You may be able to save money by paying cash, and arranging finance with our help.

See how we can help you beat 0% finance deals.

Leasing – providing the equipment you need without capital costs

With a lease, equipment is owned by the finance company, and you hire it for the period of the agreement. It remains their property, avoiding any need for need for capital expenditure from you. It is a popular option for all scales of business, from niche garment manufacturers to major textile production companies.

Monthly payments and interest rates are fixed for the duration of the contract, and you can pay for your equipment from the income it generates each month. You may also be able to choose a lease which gives maintenance and repair back to the finance company allowing for predictable costs throughout the life of the equipment.

When production equipment becomes obsolete or surplus to your needs, you can simply return it to the finance house at the end of the lease. This makes it simpler to maintain the competitiveness of your business by ensuring that you are working with the latest technology.

Asset Refinance

You may already have a substantial investment in your existing production equipment. Asset Refinance can let you release that investment and re-use the funds elsewhere in your business.

It works by raising a loan secured on your existing assets or equipment. This effect involves selling your equipment to a finance company, who will provide you with cash which you can use as you wish. You will then make monthly repayments to buy your equipment back. You can continue to use the equipment while you are repaying.  

You can also use Asset Refinance to replace an existing funding agreement - allowing you to reduce monthly outgoings.

Find out more about Asset Refinance.

Grant Funding

Companies in the textile industry can benefit from a variety of government grants, designed to support the resurgence of the sector and help businesses create jobs.

It is a feature of grant funding that government funds may need to be matched with commercial funds. At Rangewell we can help you find lenders who can help you raise the cash you need to demonstrate the commercial viability of your business, allowing you to access further funding from the government.

Borrowing to buy

You may also be able to simply borrow funding for equipment. Lending can provide a cost-effective solution in some circumstances - talking to a Rangewell expert will help you understand what they are.

There are two basic types of business loans, which can be used for any business purpose and can provide a simple way to provide funding for virtually any purpose.

Unsecured business loans can be suitable for costs up to around £25,000 and usually allow you up to 5 years to repay. Rates start at around 4.9%.

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, and payback can be arranged over 10 years or more. Because security reduces the risk for lenders, interest rates tend to be significantly lower than unsecured lending. Current rates may be as low as 2% over base rate.

Equity and Mezzanine Funding

Many lenders will simply not be able to lend you sufficient funds for major costs. Building a state of the art textile factory may cost several million pounds.

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. It can mean losing control of your company – it will certainly mean sharing all future profits with your investors. Equity investors make their return from your growth.

Taking on investors like this could support your business but may have the drawback of diluting your control of it.  Mezzanine Finance might provide an alternative. A lender will provide the investment, secured on the future of your business. They will offer a 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.

Using a Commercial Mortgage

A Commercial Mortgage could let you buy your premises, providing you with an appreciating asset, and giving your business greater security. By spreading the arrangement over 20 years or more, you may even reduce your monthly outgoings compared to the cost of renting.

If you own your factory or other business premises, you may be able to use them to raise the funding you need for a production facility.

By taking out a Commercial Mortgage on the property, you can raise a large sum which you can use for any business purpose.

Find out more about the possibilities of a Commercial Mortgage.

How we help you capitalise your textile or clothing business

At Rangewell, we work across the entire lending industry and our finance experts have personal experience of different business sectors. Our team know the lenders who specialise in finance for production machinery, and those who specialise in the textile sector.

We put this knowledge to work for you, finding the most competitive deals for the equipment you need, from a single machine to a complete line.

As well as conventional finance products, we can help you find Alternative Funding, using new loan providers and styles of funding. Whether you have a straightforward finance need, or require a complicated ‘Jigsaw’ funding plan made up of a combination of lending types, we have the answers you need.

Simply call us now to find out more.