Engineering business finance
Precision engineers, fabricators, machine shops and subcontract engineering firms. Capex-heavy on CNC and machine tools, so asset finance and asset refinance dominate, with invoice finance bridging long B2B payment terms. A common decline reason in this sector is customer concentration on one or two OEMs. Lenders to consider for engineering include Aldermore, Allica Bank, Specialist engineering asset lenders.
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Which finance fits an engineering business
Precision engineers, fabricators, machine shops and subcontract engineering firms are capex-heavy, so finance tends to follow the equipment. Asset finance spreads the cost of CNC machines, presses and machine tools over the years they earn, while asset refinance releases equity trapped in plant that is already owned and turns it into working capital. Where the receivables are with creditworthy B2B customers, invoice finance funds the gap between despatch and payment, and a commercial mortgage suits an owner-occupied workshop or unit.
The cashflow problem in engineering
Engineering cashflow is order-led and project-based. Materials, consumables and machine time are committed weeks before a stage or completion invoice is raised, and many customers run 60 to 90 day terms, so cash goes out long before it comes back. Capacity expansion then arrives in lumps, with a single machine tool representing a large, one-off outlay.
Matching asset finance to the kit and invoice finance to the receivables keeps repayments aligned with the cash each activity actually generates.
What lenders weigh, and what to do next
Lenders look at how concentrated the order book is on one or two original-equipment manufacturers, how cyclical the end markets are, the age and resale value of the plant, and how steel and raw-material price swings affect margins. Customer concentration and aged valuations are the usual sticking points, which is where asset specialists and challenger banks such as Aldermore and Allica Bank come in. If steel-price volatility or a single-buyer squeeze has triggered a decline, the engineering decline guide sets out the alternatives. If you run a limited company or LLP, you can send an enquiry through FundBiz, and a business finance broker will contact you about your options.
Cash-flow shape
Order-led and project-based. Materials and machine time go out weeks before stage or completion invoices are paid, and B2B customers often run 60 to 90 day terms. Capex arrives in lumps when capacity is added.
Products that fit
- Asset finance for CNC and machine tools
- Asset refinance to release equity from owned plant
- Invoice finance against B2B receivables
- Commercial mortgage for owned workshops
Lenders to consider
- Aldermore
- Allica Bank
- Specialist engineering asset lenders
- Challenger banks for larger tickets
Typical decline reasons in this sector
- Customer concentration on one or two OEMs
- Cyclical end markets such as automotive and aerospace
- Aged plant and machinery valuations
- Margin compression from steel and raw-material price volatility
FAQ
What kind of business finance fits engineering?
Usually asset finance for CNC and machine tools or asset refinance to release equity from owned plant. Every product that fits is under Products that fit above.
Why do engineering businesses get declined?
The most common reason is customer concentration on one or two OEMs. The others are under Typical decline reasons in this sector above.
Which UK lenders fund engineering?
The first two on our list: Aldermore; Allica Bank. The full list is under Lenders to consider above.
Send an enquiry
Tell us what you need in 2 minutes. FundBiz is not a lender and does not run a credit check. We pass your enquiry to a business finance broker, who will contact you about your options. For limited companies, LLPs and partnerships with four or more partners.
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