Business line of credit · Manufacturing
Business line of credit for manufacturing
Manufacturing finance is capital equipment lending combined with working capital for raw materials, covering CNC machines, presses and packaging lines as well as the gap between buying stock and being paid for finished goods.
How a business line of credit works for manufacturing
A line of credit handles the smaller irregularities a manufacturer faces — a tooling run, a maintenance shutdown, a bulk material buy at a good price. Draw it, repay it, leave it available. It works best alongside term finance on the plant rather than as a substitute: using a revolving facility to buy a ten-year machine puts short-term money against a long-term asset. Expect a line fee on the limit and, for facilities of size, security over business assets and a director guarantee.
The cash-flow pattern we plan around
Cash out for raw materials, then weeks of work in progress, then 30–60 day terms on finished goods — a cycle that lengthens as the business grows.
What manufacturing typically fund
- CNC machines, lasers and press equipment
- Packaging and materials handling lines
- Raw materials and imported componentry
- Forklifts and factory logistics
- Factory fit-out, power upgrades and compliance works
Business line of credit for manufacturing: the numbers
| Typical amounts | $10,000 – $500,000 |
|---|---|
| Term | 6–24 months |
| Indicative rates | 11.5% – 24% p.a. |
| Repayments | Weekly or monthly minimums on the drawn balance |
| Speed | 1–3 business days |
| Documents manufacturing usually need | ABN, GST registration and two years of financials · Supplier quote or proforma invoice for the machine · Debtor ledger and aged receivables report |
Rates are indicative, change without notice and depend on the lender, product, asset, term and your credit profile at the time of application. They are not an offer of finance. Comparison rates, where shown, are true only for the example given.
Key terms
Manufacturing equipment finance
Manufacturing equipment finance is secured lending for production machinery such as CNC machining centres, laser cutters and packaging lines, often structured to fund supplier progress payments and to commence repayments on commissioning.
Working capital cycle
The working capital cycle is the time between paying for raw materials and receiving payment for the finished goods made from them, during which the business funds the value of that inventory itself.
What is a business line of credit?
A business line of credit is a revolving facility with a pre-approved limit. You borrow only what you need, pay interest only on the drawn balance and can redraw repaid funds without reapplying.
Line of credit vs business loan
A business loan pays a lump sum repaid on a fixed schedule; a line of credit is a flexible limit drawn as needed. Loans suit one-off purchases, lines of credit suit fluctuating working-capital needs.
Questions from manufacturing
How do manufacturers finance machinery that is built to order overseas?
Progress payments to the manufacturer are funded through a trade finance facility or by the equipment lender, and the whole amount converts to a chattel mortgage when the machine is installed and commissioned. Tell your broker the payment schedule early so the structure is in place before the deposit is due.
How do manufacturers fund raw materials and work in progress?
Trade finance pays suppliers for raw materials with 90 to 180 days to repay, invoice finance advances against finished goods invoices on 30 to 60 day terms, and a line of credit fills the gaps. Together they fund the whole cycle from materials to payment, and the facilities grow with turnover.
Can I release capital from machinery I already own?
Yes. A sale and leaseback or refinance secured on unencumbered CNC machines, presses, lasers and lines can release 60 to 80 per cent of their valuation for working capital or expansion, with the machines staying on your floor. Lenders like recognised brands with strong secondary markets.
Does a supply contract help a manufacturing finance application?
Yes. A contract or purchase orders from a major customer for the product the machine will make are strong evidence of earnings and often move an application from a deposit to no deposit, or from full financials to a lighter assessment. Include them with the machine quote.