How to Finance a Full Manufacturing Production Line

A production line needs a project summary

Sending six unrelated quotes to a lender creates unnecessary work.

Start with a one page explanation of the project.

Describe what the line will produce, which machines are being purchased, who the suppliers are and when the business expects the line to be operating.

Then attach the individual quotes.

Build a complete equipment schedule

Create a simple list of every major asset.

For each item, show the supplier, purchase price, new or used status and expected delivery date.

If one supplier is providing a complete turnkey line, break out the major equipment anyway.

The lender needs to understand the assets behind the financing request.

Separate equipment from services

Large projects often include engineering, software, freight, rigging, installation, commissioning and training.

Those costs may be important to making the line operational, but they are not the same as the equipment itself.

Show each category separately.

The financing source can then decide what can be included in the structure.

Payment timing can be as important as the total amount

Production equipment suppliers may ask for deposits and progress payments months before final delivery.

If several suppliers are involved, their payment schedules may overlap.

Give the lender that timetable early.

A financing structure that works for one payment at delivery may not work for a project that requires several advances during the build.

Explain how the machines depend on each other

If one machine feeds another, say so.

If the packaging line cannot operate until the upstream processing equipment is commissioned, explain that.

If a robot connects two CNC machines, show the relationship.

The lender does not need an engineering drawing, but it should understand why the company is purchasing the equipment together.

Think about the cash required outside the financing

A production line can create costs before it creates revenue.

The business may need deposits, facility work, extra inventory, training and payroll while the line is being installed.

Do not assume every project cost will be financed.

Build a cash plan that shows what the business can cover directly and what you expect the equipment facility to cover.

What should you provide?

• Project summary
• Equipment schedule
• All vendor quotes
• Supplier payment schedules
• Installation costs
• Expected delivery dates
• Expected commissioning date
• Business reason for the project
• Financial information requested by the lender

Do not finance each machine in isolation if the project is connected

A business can create unnecessary complexity by arranging one piece of financing for the first machine, another for the second and then discovering the remaining project no longer fits comfortably.

Show the full plan from the beginning even if purchases will close at different times.

Our guide to financing multiple manufacturing machines covers smaller multi asset purchases.

If you already have several quotes, send Raymond Leigh the full equipment package so the project can be reviewed as one transaction.