While business is competitive by nature, few industries are as fiercely competitive as manufacturing. Having the latest technology can be a vital asset to your businesses success and how you fund that equipment may be even more vital. Whether you use company profits, lines of credit, bank loans or a specific machine tool funding loan, making the right choice helps your company stay productive and stay ahead. Here’s what you need to know about manufacturing equipment financing and how it can help you expand your business.

How to Finance Manufacturing Equipment and Tools

Depending on the manufacturer’s financial position, needs and projected growth it will be necessary to take out manufacturing equipment loans. Manufacturing firms with solid credit can qualify for 100% financing for 5, 6, 7 and even 8-year loans for equipment. The ideal timeframe for a manufacturing loan is between 3 to 7 years (while the minimum is 2 years on average). While there are other sources of funding available, machine tool financing can provide you a low rate and the best security as usually there is no need for a blanket lien of assets across your company and only the equipment loaned on is liened as security. 

Manufacturing Equipment Financing Options

One thing you should know is that today, nearly every aspect of an equipment purchase can be financed, even the freight and installation process. As a manufacturing firm, you should make an effort to keep as much cash around as possible. The trick is to build credit and keep your cash. Whether that cash is savings or lines of credit it is always better to have that liquidity available when needed. When there’s an emergency it’s better to have the cash on hand to deal with it rather than overextend yourself.

First, the most common, capital leases let borrowers use manufacturing equipment while keeping the loan off of their books. It typically is treated as a monthly rental payment with a buyout at the end. The company is awarded full ownership of the equipment after the loan has been paid off.

Other manufacturing equipment financing options include:

  • Finance leases
  • Operating leases
  • Tax leases
  • Non-tax leases
  • Loans

Out of the options we’ve mentioned above, manufacturing loans are typically the best option for businesses as they keep your cash assets available and secure only a lien against the newly purchased machinery as collateral. 

Some financiers offer a One-Page Credit Application in which you can get up to half a million dollars in financing for machinery that’s brand new, used, or even refurbished. The One-Page Credit Application is arguably one of the most convenient finance options available to manufacturers. It’s fast, flexible, and covers tools, shipping, and rigging. It also sports low monthly payments with options for deferred and structured payment plans.

How to Decide What Financing Tool is Right for You

Choosing the right financial tool for you depends on what your priorities are as well as your short and long term goals. One of the most important parts of any decision on industrial equipment financing is which financier to work with. Working with an experienced financier that offers manufacturing loans is preferable as they will have the most options to choose from. Also, be sure to look for a financier who is familiar with manufacturing terminology. Financiers know manufacturing lingo will offer more favorable terms because they will have a more complete understanding. What might sound complicated and alien to one who doesn’t know the jargon might sound like a sensible idea to one who does.   

Whatever method you choose to fund your equipment purchase whether new or used know that Southern Fabricating Machinery Sales works with the top financiers in the market. Please checkout our page on Machine Tool Finance and let us help you get the new tools you need for productivity and profitability. 

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