How Much Can My Business Borrow? A Guide to Business Finance Affordability
“How much can my business borrow?” is one of the…
At the same time, investment in new equipment isn’t the only pressure on cash flow. Manufacturers may need to purchase raw materials, hold stock, meet payroll and pay suppliers weeks or even months before receiving payment from their own customers.
This is where manufacturing finance can play an important role.
Rather than committing large amounts of working capital to machinery, equipment or expansion, the right finance structure can allow manufacturers to spread costs, release cash tied up in existing assets or invoices, and invest in future growth.
In this complete guide to manufacturing finance, we look at the different funding options available to UK manufacturers, what equipment can be financed, how lenders assess applications and how finance can support investment, automation and growth.
| Finance Requirement | Potential Finance Solution |
|---|---|
| New manufacturing machinery | Asset Finance / Hire Purchase |
| Used machinery | Asset Finance |
| CNC machinery | Asset Finance |
| Production and assembly lines | Asset Finance |
| Robotics and automation | Asset Finance / Business Loans |
| Commercial vehicles | Asset Finance |
| Working capital | Business Loans / Overdrafts |
| Outstanding customer invoices | Invoice Finance |
| Existing machinery and equipment | Asset Refinance |
| Expansion or factory improvements | Business Loans / Asset Finance |
| Digital technology and automation | Asset Finance / Business Loans |
UK manufacturing remains a substantial part of the economy. The latest Office for National Statistics figures show that UK manufacturers generated £452 billion in product sales during 2025.
For individual manufacturing businesses, maintaining that competitiveness frequently requires continued investment in equipment, technology, people and production capacity.
Manufacturing finance is a broad term covering funding solutions used by manufacturers and engineering businesses to purchase machinery, invest in technology, manage working capital or support business growth.
There isn’t one specific product called manufacturing finance. Instead, the right solution depends on what the business is trying to achieve.
A manufacturer purchasing a £250,000 CNC machine may require Asset Finance, while another experiencing cash flow pressure because customers take 60 days to pay may benefit more from Invoice Finance.
A business with valuable machinery already on its balance sheet could potentially use Asset Refinance to release additional working capital.
Understanding the requirement first is therefore essential before deciding which type of finance is most appropriate.
Manufacturing businesses can potentially finance a wide range of machinery, equipment and other commercial requirements.
CNC Machinery
Computer Numerical Control machinery represents a significant investment for many engineering and manufacturing businesses.
Finance can potentially be used for equipment including:
Asset Finance can allow the cost to be spread over an agreed term rather than requiring the business to fund the entire purchase from existing cash reserves.
Production and Assembly Lines
Increasing production capacity may require more than purchasing an individual machine. Manufacturers may need complete production lines, conveyors, packaging systems or assembly equipment. Depending on the lender and transaction, it may be possible to finance multiple pieces of equipment within one facility.
Injection Moulding Machinery
Injection moulding equipment can represent a substantial capital investment. Finance can potentially help plastics manufacturers acquire new or used machinery while retaining working capital for materials, labour and other operating expenses.
Mechanical Presses and Fabrication Equipment
Engineering and metalworking businesses may require specialist equipment including:
Both new and used machinery may potentially be considered for finance, subject to the lender’s criteria.
Woodworking Machinery
Manufacturers operating in joinery, furniture production and other woodworking industries may use finance to acquire:
Packaging Machinery
Automated packaging equipment can increase output while reducing manual processes. Finance may potentially be available for filling, labelling, wrapping, sealing, palletising and other packaging machinery.
Spray Booths and Specialist Installations
Manufacturing equipment isn’t always a standalone machine. Some projects involve equipment that needs to be installed or incorporated into the manufacturer’s premises. Depending on the lender and transaction, it may be possible to finance both the equipment and certain associated installation costs.
Liquid Corporate Finance recently arranged funding for a Lancashire manufacturer purchasing a fully installed industrial spray room, with the complete £20,345 supplier invoice incorporated into the finance facility.
Fully Installed Spray Room Financed case study
Commercial Vehicles
Manufacturers may also require vehicles to transport materials, finished products, engineers or equipment.
Finance can potentially be used for:
This can allow vehicle investment to be kept separate from the working capital required for manufacturing operations.
Asset Finance is one of the most common ways for manufacturers to fund machinery and equipment. Rather than paying the entire purchase price upfront, the cost of the asset can be spread over an agreed period. This can help manufacturers invest in equipment while preserving cash for other areas of the business.
The British Business Bank explains that Asset Finance can be used to fund everything from machines and manufacturing plant to vehicles and other business equipment.
Asset Finance is also an important source of UK business investment more broadly. According to the British Business Bank’s Small Business Finance Markets 2025/26 report, Finance & Leasing Association data indicates that Asset Finance may fund as much as 40% of UK business investment in vehicles, machinery and equipment.
Hire Purchase for Manufacturing Equipment
Hire Purchase is commonly used where a manufacturer ultimately wants to own the machinery. The lender funds the purchase and the business repays the finance over an agreed period. Once all required payments have been made and the terms of the agreement satisfied, ownership passes to the business.
Hire Purchase can be particularly appropriate for machinery expected to remain productive for many years.
Finance Lease
A Finance Lease allows the business to use machinery or equipment in return for agreed rental payments. Unlike Hire Purchase, ownership doesn’t automatically pass to the business at the end of the primary term. Whether Hire Purchase or Finance Lease is more appropriate will depend on the asset, business objectives, accounting and tax considerations and the structure offered by the lender.
Businesses should discuss the accounting and tax treatment with their accountant or tax adviser.
Manufacturing finance isn’t necessarily restricted to brand-new equipment. Many manufacturers purchase used machinery because it can provide the required capability at a significantly lower capital cost.
Used CNC machines, presses, injection moulding equipment and other specialist machinery can potentially be financed.
However, lenders may consider:
Older or highly specialised machinery may require a different lending approach from mainstream equipment. This is one area where using a broker with access to specialist Asset Finance lenders can be particularly useful.
Automation is becoming increasingly important within UK manufacturing.
Investment might include:
The Government’s Made Smarter Adoption programme has specifically supported SMEs adopting industrial digital technologies through expert advice, digital transformation support, skills training and grant funding.
Depending on the equipment and lender, Asset Finance may provide another way of funding automation projects without requiring the entire investment to be paid upfront. For manufacturers, the commercial decision should ultimately come down to what the technology can achieve.
If new equipment can increase production, reduce waste, improve consistency or overcome capacity constraints, spreading the investment over its productive life can make commercial sense.
Manufacturing can create a particularly demanding cash flow cycle.
A business might need to:
Purchase raw materials
↓
Pay employees
↓
Manufacture the product
↓
Deliver the finished goods
↓
Raise an invoice
↓
Wait 30, 60 or 90 days for payment
The business has therefore incurred substantial costs long before receiving the corresponding revenue. This is why manufacturers shouldn’t necessarily think about finance purely in terms of borrowing money. The objective is often to match the right type of funding to the right requirement.
Asset Finance can fund long-term machinery.
Invoice Finance can support the sales ledger.
Business Loans can provide additional working capital or finance broader investment.
Asset Refinance can release cash from equipment already owned.
Using those products appropriately can help prevent valuable working capital from becoming unnecessarily tied up.
Invoice Finance can be particularly relevant to manufacturers supplying other businesses on credit terms.
Instead of waiting 30, 60 or 90 days for customers to settle invoices, an Invoice Finance provider can potentially release a substantial proportion of the value of eligible invoices earlier.
This can provide working capital to:
As eligible invoiced sales increase, the amount of funding potentially available can also increase.That makes Invoice Finance particularly useful for manufacturers experiencing rapid growth.
How Does Invoice Finance Work? A Complete Guide for UK Businesses
Liquid Corporate Finance helped an established electronics manufacturer that supplied distributors across the UK and Europe.
The company wanted to improve its existing Invoice Finance facility while also reducing the cost of expensive borrowing accumulated during the pandemic.
We secured a £750,000 Invoice Finance facility, providing £250,000 more availability than its previous provider, together with additional funding that enabled expensive borrowing to be consolidated.
The resulting reduction in monthly finance costs put approximately £7,000 per month back into the company’s cash flow.
Invoice Finance Plus RLS Loan case study
Manufacturing businesses can accumulate substantial value in machinery and equipment.
If those assets are owned outright, or there is sufficient equity within them, Asset Refinance may allow the business to release some of that value as working capital.
For example, a manufacturer may own:
Rather than selling productive machinery to raise cash, the business may potentially refinance it and continue using the equipment.
The capital released could then be used for:
The British Business Bank identifies machinery and industrial equipment among the assets that can potentially support asset-based lending.
Not every manufacturing investment is linked to a specific asset.
A Business Loan can provide greater flexibility where funding is required for broader purposes.
This could include:
Business Loans can be secured or unsecured depending on the lender, amount required and circumstances of the business.
Growth can create its own funding problems.
A manufacturer might win a substantial new contract that will ultimately increase revenue and profitability but still require significant upfront expenditure. The business may need additional machinery, raw materials, employees and warehouse capacity before receiving any income from the contract.
This can create what is sometimes referred to as a working capital gap. The business is growing but growth itself requires cash. The right funding package could therefore involve more than one finance product.
For example:
Asset Finance → new production machinery
Invoice Finance → working capital against customer invoices
Business Loan → recruitment or factory improvements
Rather than trying to fund everything from one large loan, matching each requirement to an appropriate finance product can create a more sustainable structure.
Eligible manufacturing businesses may also be able to access finance through the Growth Guarantee Scheme (GGS).
The scheme supports a range of commercial finance products through accredited lenders, subject to eligibility and lender underwriting. This can potentially include Asset Finance, Business Loans, Invoice Finance and other eligible facilities.
However, the Government guarantee is provided to the lender.
The business remains responsible for repaying 100% of the finance.
Manufacturers considering the scheme should therefore assess affordability in exactly the same way as any other commercial finance facility.
Growth Guarantee Scheme Update: The Complete Guide for UK Businesses
Manufacturers should also investigate whether grant funding is available for planned investment.
Government and regional programmes can sometimes support projects involving technology, productivity, automation and digital transformation. For example, Made Smarter programmes have provided support to eligible manufacturers adopting industrial digital technologies. Current availability and eligibility can vary by region and programme.
Finance and grants aren’t necessarily mutually exclusive. Depending on the specific grant rules and lender requirements, a business may potentially use a grant to contribute towards a project while financing the remaining eligible investment.
Always check the rules of the individual grant programme before committing to equipment or finance.
Every lender has different criteria, but several areas are likely to be important.
Trading History
An established manufacturer can normally demonstrate its performance through filed accounts and management information.
A newer business may need to provide additional information about management experience, projections, contracts and the proposed investment.
Financial Performance
Lenders may review turnover, profitability and balance sheet strength to understand the overall financial position of the company.
Cash Flow and Affordability
A lender will want to understand whether the business can comfortably meet the proposed repayments alongside its existing commitments.
Existing Borrowing
Existing Hire Purchase agreements, loans, overdrafts and other commitments will usually form part of the affordability assessment.
The Machinery
For Asset Finance, the equipment itself matters.
The lender may consider its age, value, supplier, expected working life and potential resale market.
Purpose of the Finance
A clear commercial rationale strengthens the lender’s understanding of an application.
For example:
“£150,000 required for an additional CNC machine following a sustained increase in customer orders and existing production reaching capacity.”
That provides far more context than simply requesting £150,000.
Credit Profile
The business and, where appropriate, directors’ credit histories may also be considered.
A less-than-perfect credit profile doesn’t automatically prevent finance being available, particularly where there is a strong underlying business and a clear explanation for any historic issues.
There isn’t one standard amount.
The finance available will depend on factors including:
The appropriate amount isn’t necessarily the maximum a lender will provide. It should be enough to achieve the business objective while keeping repayments affordable.
How Much Can My Business Borrow?
Potentially.
This is particularly relevant to manufacturing equipment because the invoice may include more than the physical machine.
There could also be costs for:
Whether these costs can be financed depends on the lender and structure of the transaction.
Liquid Corporate Finance has previously arranged a manufacturing facility where the specialist equipment and installation costs were incorporated into the same Hire Purchase agreement, allowing the customer to fund the complete project rather than only the physical equipment.
This can be particularly valuable where installation represents a significant proportion of the overall investment.
VAT can create a significant initial cash requirement when purchasing expensive manufacturing machinery.
Depending on the finance structure and lender, there may be options that help businesses manage the VAT element of an equipment purchase. The appropriate structure will depend on the transaction and the company’s VAT position.
Businesses should discuss the tax treatment with their accountant and establish how VAT will be funded before committing to a machinery purchase.
How Does VAT Deferral Work with Hire Purchase?
There isn’t one funding solution that suits every manufacturer.
| Requirement | Potential Solution |
|---|---|
| CNC machine | Asset Finance |
| Production line | Asset Finance |
| Used manufacturing machinery | Asset Finance |
| Robotics and automation | Asset Finance / Business Loan |
| Commercial vehicles | Asset Finance |
| Factory expansion | Business Loan |
| Unpaid invoices | Invoice Finance |
| Existing machinery | Asset Refinance |
| Raw materials and stock | Business Loan / Working Capital |
| General expansion | Business Loan / Combined Facility |
The starting point should always be understanding what the business is trying to achieve.
Manufacturing transactions can be more complex than straightforward business borrowing.
The machinery may be highly specialised, imported, used, installed permanently within a factory or supplied under staged payment terms. Different lenders also have different appetites for particular assets and manufacturing sectors. An independent finance broker can help identify lenders that understand both the equipment and the business.
At Liquid Corporate Finance, we can look beyond simply obtaining an approval and consider:
The aim is to structure finance around the commercial requirement rather than trying to make every transaction fit the same product.
We regularly help UK manufacturing and engineering businesses secure funding for machinery, specialist equipment, working capital and business growth.
Our manufacturing case studies include funding for a fully installed industrial spray room and a substantial Invoice Finance facility for an electronics manufacturer.
Explore our Manufacturing Finance case studies to see real examples of how businesses have used Asset Finance, Invoice Finance and other funding solutions to invest in equipment, increase production capacity, improve cash flow and support growth.
What is manufacturing finance?
Manufacturing finance covers funding solutions used by manufacturing and engineering businesses to purchase machinery, finance equipment, improve cash flow or invest in business growth.
Can manufacturing machinery be financed?
Yes. Asset Finance can potentially be used for a wide range of manufacturing machinery including CNC equipment, production lines, presses, injection moulding machinery and specialist engineering equipment.
Can used manufacturing machinery be financed?
Yes, potentially. Lenders will usually consider factors such as the machinery’s age, condition, value, supplier and expected useful life.
Can installation costs be included in Asset Finance?
Potentially. Some lenders may consider eligible delivery, installation or associated costs as part of the overall transaction. This depends on the lender, asset and structure.
Can a manufacturer finance automation or robotics?
Yes. Automation, robotics and other production technology can potentially be funded using Asset Finance or other business funding solutions, subject to lender criteria.
Can manufacturing businesses use Invoice Finance?
Yes. Manufacturers selling to other businesses on credit terms can potentially use Invoice Finance to release working capital from eligible unpaid invoices.
Can I refinance manufacturing machinery I already own?
Potentially. Machinery with sufficient value or equity may be suitable for Asset Refinance, allowing the business to release capital while continuing to use the equipment.
Can manufacturers get finance with existing borrowing?
Yes, potentially. Existing finance doesn’t automatically prevent further borrowing, but lenders will consider existing commitments when assessing affordability.
Whether you’re purchasing a new CNC machine, upgrading a production line, investing in automation or looking for additional working capital, the right finance structure can help you invest without putting unnecessary pressure on cash flow.
At Liquid Corporate Finance, we work with a wide panel of lenders to help UK manufacturing and engineering businesses access Asset Finance, Business Loans, Invoice Finance, Refinance and other commercial funding solutions.
Speak to us today for a free, no-obligation discussion about your manufacturing finance requirements.
Longer term = lower payments
This enquiry will not affect your credit score