Asset Finance for Packaging
Get in touchPackaging and wrapping are the last stages of many manufacturing processes and are critical for distribution to the wholesale and retail sectors.
Packaging machines such as blister packing machines, coding and marking equipment, extruding machines, foil wrap machines and others are becoming increasingly sophisticated.
It is critical to stay current with packaging technologies and new equipment, which can require specialist knowledge.
Packaging finance options for essential packing machines are variable, but we are here to help.
Below, we will talk you through the basics of the most important info you need to fully understand hire, purchase, and other cost-effective packaging finance options.
What is Asset Finance for the Packaging Industry?
Asset financing is a popular source of capital for many packaging manufacturers.
Asset finance allows a firm to borrow money or take out a loan against its existing assets, making it simpler to acquire, operate, and benefit from your current machinery, such as blister packing machines, foil wrap machines, or coding and marking equipment.
Instead of making a hefty upfront payment, asset finance spreads the expense out over time with smaller monthly repayments.
Use the existing assets required for operation while you pay for them to relieve cashflow pressure and fund your business.
Alternatively, make more and better use of the high-value technology and current machinery that your company has.
Use such assets as collateral for loans to fund your company's growth.
What Packaging Machines can be Financed?
Packaging and wrapping machinery for your production line that is asset refinanceable includes:
Tape bundling machines
Bag Filling machines
Sealing machines
Strapping machines
Foil wrap machines
Labelling and printing stations
Cleaning machines
Drying machines
Sterilisation machines
Container machines
Multifunction machines
Secondary packaging machines
Shrink Tunnels, ovens and guns
Palletising machines
Pharmaceutical packaging machines
Shrink Wrapping machines
Weighers
Blister packing machines
Coding and marking equipment
Extruding machines
Certain vehicles and similar technology
Speak to our team with extensive knowledge, to find out more about asset finance and funding solutions!
Packaging Equipment Finance Options
Wrapping and packing must often be integrated into the manufacturing process, requiring an additional station to be budgeted for when designing the production line.
Only the largest manufacturing enterprises are likely to have the cash reserves to fully outfit a production operation with new equipment, including blister packing machines, foil wrap machines, coding and marking equipment, and more.
Let us take a look at all of the packaging finance options you and your team can use to spread the cost of your machinery around a bit without causing problems for your suppliers.
Hire Purchase for Packaging Companies
A simple packaging finance approach to spread the expense of the new equipment that powers your production facility is through hire purchase.
Budgeting is made straightforward and easy because you pay a fixed rate of interest and predetermined monthly payments.
You will be required to pay a deposit, which is normally between 5% and 25% of the overall cost, and then repay the remaining balance plus interest over a predetermined purchase period of up to 60 months.
You might also be able to arrange your hire purchase finance payments such that they match your anticipated cash flow.
By agreeing to make a final lump sum payment, also referred to as a balloon payment, after your production is fully operating and income is flowing in, you could, for instance, lower your regular payments.
Asset Refinance
Most likely, you have already made a large investment in your factory's general infrastructure and production machinery.
These machines are expensive assets, with a high cost and a high asset value impacting working capital.
Your packaging industry team could take advantage of that investment by signing an asset refinance arrangement.
This functions by allowing you to sell your current assets to a financial business, which will then pay you cash that you may use any way you like.
After that, you will pay a set amount each month to get them back.
Equipment Leasing for Packaging Manufacturers
With a lease, the financial firm hires you the equipment.
As long as it stays in their possession, there is no need for capital outlays, and you will never have to deal with outdated technology.
For the term of the contract, both interest rates and monthly payments are fixed.
You may also be able to select a lease that transfers maintenance and repair responsibility back to the lending institution, lowering your risk.
At the conclusion of the lease, you can return any equipment that has grown obsolete or no longer serves your production needs to the financial company.
This makes it easier to accept new equipment, enabling you to modernise your business to take advantage of the most recent advancements.
Operating Lease for Packaging industry companies
An Operating Lease, like a Finance Lease, enables you to rent the asset as long as you require it.
An Operating Lease only covers a portion of the asset's useful life, which is the main distinction between the two.
Because the cost is determined by the discrepancy between the asset's initial purchase price and its residual value at the conclusion of the lease, you pay a lower rental amount for the equipment.
You do not have to worry about getting rid of the equipment or recovering its worth; you can use it fully for as long as you need it.
What is the Interest Rate on Packaging Machinery?
The interest rate on packaging machinery loans ranges from 2%-20%.
This depends on the specific terms of your loan and the machinery involved, but in most cases, thanks to the high value of these machines and assets, the interest rates will be lower than for most other forms of loan.
Benefits of Packaging Finance Agreement
There are many benefits to a packaging finance agreement for most packaging companies and businesses, irrespective of your business purpose .
This type of finance for the packaging industry allows you to finance the purchase of packaging machines and other equipment for your team without worrying about the huge upfront cost these assets can require, allowing you to invest in the growth of your businesses without needing so much capital upfront to purchase the machines you need.
Summary
If you want the best equipment but do not have the cash to purchase the best equipment for your team, a packaging finance agreement is the best option for you.
This allows businesses access to vehicles and other packaging equipment at a reasonable price, spreading the cost of assets across a long period of time through a range of equipment finance options for businesses.
Please note we are commercial finance brokers, not a lender.
It's important to work with a company that's authorised and regulated by the financial conduct authority (FCA).