Finance for Woodworking Machinery

Whatever sector your woodworking business specialises in, whether you are producing furniture, building components or other products, you will be aware of many of the changes. The development of Computer Numeric Controlled (CNC) machines, for example, lets you mass-produce and reproduce products faster, with less waste and with more complex designs than ever before. Rechargeable power tools speed up work.

At the same time, you will be faced with new demands from legislation. Health and Safety is becoming ever more stringent, and you need new standards of ventilation and extraction simply to run your factory. Many products must conform to precise standards. Other challenges come from the high price of raw materials, with many traditional timbers priced out from some applications. The weak pound makes exotic timbers especially uneconomic.

Competition is high, and the demand for reduced environmental impact throughout  your product’s lifecycle is growing. But with the right financial arrangements, all these new pressures can help you build a more profitable business.

At Rangewell, we know the challenges you and your woodworking operation face - and we know the financial solutions that can help provide the equipment you need, from hand tools to automated production machinery.

The tools you need may include:

• Air filtration and dust collection systems
• CNC routers
• Biscuit joiners
• Domino jointers
• Chainsaws
• Circular saws
• Jigsaws
• Miter Saws
• Reciprocating Saws
• Radial arm saw
• Scroll Saws
• Bandsaw
• Electric and air powered drills
• Nail gun
• Router
• Sanders
• Combination machines
• Double side and Four sided planers
• Jointer and mortisers
• Lathes
• Panel saw
• Pin router
• Spindle moulder (Wood shaper)
• Table saw
• Tenoner
• Plywood machinery
• Handing equipment including conveyors

Your funding options

You may be able to set up a woodworking manufacturing business with basic tools, but a fully automated volume line will demand investment in the tens or even hundreds of thousands of pounds.

Only the largest and long-established woodworking operations have the cash reserves to equip a full production operation outright.

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

• Asset Finance
• Borrowing
• Commercial Mortgages

Asset Finance

Asset Finance is a blanket term for Hire Purchase and Leasing. These solutions can help you acquire virtually any type of tool or production equipment.

Hire purchase – buying your production equipment

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.

Leasing – 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. You may also be able to choose a lease which gives maintenance and repair back to the finance company.

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.

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 adopt the latest technology - helping your business maintain a competitive edge.

Asset Refinance

Asset Refinance can let you release the investment you have already made in existing equipment, and re-use the funds elsewhere in your business.

It works by letting you sell your existing equipment, your assets, to a finance company who will provide you with a cash sum which you can use as you wish. You will then make monthly repayments to buy them back.

You can continue to use the equipment while you are repaying it. You can also use Asset Refinance to replace an existing funding agreement - allowing you to reduce monthly outgoings.

Find out more about Asset Refinance.

Pay less than with suppliers’ finance

Woodworking equipment manufacturers and dealers will often offer HP arrangements. These can sound very attractive, and can even include 0% options. While these can look worthwhile, at Rangewell we have found that there can actually be 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.

Borrowing to buy

You may also be able to simply borrow funding for individual woodworking machines. 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 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.

Using a Commercial Mortgage to raise funds

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. Repayments can be over 20 years or more.

Find out more about raising funds with a Commercial Mortgage.

How we help you capitalise your woodworking business

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

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.

It lets us help you find the most appropriate financial solutions you need to capitalise your business.

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 lending types, we have the answers you need.

Simply call us now to find out more.