Surface finishing equipment finance

How do surface finishing businesses finance equipment?

Powder coating, electroplating, shot blasting and spraying businesses typically finance finishing lines and ovens on hire purchase, since these have a long service life and a business generally intends to keep running the same line for years. Environmental compliance infrastructure, such as extraction and effluent treatment, is often bundled into the same investment and is closer to a fixed installation than a moveable asset, so a secured business loan is frequently a better structure for that part of the project.

Buyers are powder coating, electroplating, shot blasting and spraying businesses, most often serving manufacturing and automotive supply chains. Capacity is usually added to take on a specific new customer or process, and environmental compliance requirements, covering extraction and effluent treatment, are often bundled into the same investment decision, since new capacity and compliance upgrades are frequently triggered together by the same customer contract or regulatory inspection. This means the finance conversation usually needs to cover both the production line and the compliance infrastructure from the very first quote.

Hire purchase suits finishing lines and ovens well, since this equipment has a long service life and a business generally intends to keep running the same line for the bulk of that life rather than replace it on a technology cycle. A secured business loan is often a better fit for compliance infrastructure such as extraction, since this is closer to a fixed installation tied to the building than a moveable asset a lender could realistically repossess and resell.

Mainstream finishing equipment has a specialist but real secondary market among other finishing businesses, which gives lenders reasonable comfort with the security. Compliance and extraction installations have very little resale value away from the building they serve, so lenders assess this part of the project mainly on the strength of the business's trading record rather than the installation itself. Existing customer contracts and accreditations held by the business both help support that part of the assessment.

The mistake we see most often is treating the finishing equipment and the environmental compliance work as separate buying decisions, when in practice a lender assessing the deal, and a regulator inspecting the finished business, will treat them as one project, and financing them together generally produces a cleaner, more coherent facility than dealing with them separately. Bringing both quotes to a broker at the same time, rather than in sequence, is usually the simplest way to achieve that.

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