How to Fund a Manufacturing Company

Manufacturing companies have the potential to make a lot of money. Local businesses will be keen to work with local existing businesses and manufacturing companies, and there should be no shortage of work. As long as you pick the right business idea, you should be okay.

Having said that, a lot depends on money. Or, more specifically, if you can raise enough money to fund a manufacturing company. Thankfully, there are plenty of business secure funding ideas out there for you to call upon. Aside from the typical options – like business loans or investors – we’ve got three sources of funding options for you to consider:

R&D Tax Credits

Research and development tax credits are potentially available for manufacturing businesses in the UK and Northern Ireland. This grant and funding scheme is a government initiative that rewards companies who are willing to innovate and come up with new ideas. Effectively, you can use R&D tax credit grant scheme to receive a cash payment or a reduction in your corporation tax.

As a manufacturing company, a lot of your work revolves around research and development. You research and develop new ways of creating products, and you might even come up with highly innovative product ideas. So, you could be eligible for this government initiative. As a result, you can acquire some additional funds or save money on your yearly tax bill.

Equity Funding

R&D tax credits are perhaps best for companies that have got enough money to actually start and grow their business. However, equity funding is ideal if you’re really struggling to raise funds. It’s a type of business funding that revolves around the idea of selling your equity.

In essence, you raise money by selling shares in your business. This way, people can buy a part of your company and own some of it. The upside of this is that you can seek out multiple investments from lots of different people. The downside is that they hold a share in your company, so they will take a percentage of the profits.

Asset Finance

Asset finance is a helpful way to gain the equipment your manufacturing company needs to operate. You will have access to the equipment you require but will have to pay for it in installments. It’s basically a secured loan that’s only used to pay for an asset.

For instance, you can use asset finance to get a specific type of manufacturing machinery and equipment. The application process is basically instead of paying for it outright, you get the asset, then pay back the money over a period of time. It lets you have near-instant access to valuable assets while avoiding the full costs all in one go. This is a very popular business funding to support startups that need some equipment to really get off the ground.

It’s well worth looking at all three of these business funding options. Something like equity funding or asset business finance is a brilliant way of getting your manufacturing company off the ground. Then, look into R&D tax credits to get some tax relief – or a cash sum that you can invest back into your business every year.

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