Funding

Woodworking machinery is usually regarded as an investment item which will pay back over future years. In this recession dominated times we hear a lot about the difficulties of obtaining finance. It is however still quite possible for those with a sound business case to secure funding. Here are the most usual ways-

Bank Overdraft
For short term funding of the business. More suitable for working capital fluctuations than something with predictable repayment patterns such as machinery purchase.

Business Loan
Business Loans are available from a vast range of providers and at an equally wide range of cost. Cost of loans will vary with the amount of risk the lender perceives so this might even vary across industries. It will certainly be affected by the level of security offered. In these more difficult times unsecured loans are hard to find – expect to secure the loan but then look for the cost advantage of that security...

Hire Purchase
A familiar way of acquiring personal assets, the principles also apply to business and are similar to direct leasing (see below).

Asset Finance
Asset Finance allows you to borrow against assets owned by the business and pay a rental charge for the use of the asset. This can work for newly acquired assets (Direct leasing) or to raise money on assets you already own (Sales and Leaseback) under both methods you retain use of the asset but are renting rather than owning the asset.

Invoice Finance
Raise funding against your unpaid sales invoices. Specialist factoring companies operate in this increasingly popular market. It can be expensive though and, if visible (i.e. the factoring company is collecting your due amounts directly) can also be damaging to customer relations.

Commercial Mortgages
Because these are secured on property, commercial mortgages have recently become harder to find – they still exist though and will depend on the ratio of equity in your property to the amount borrowed.