Manufacturing companies often have a hard time getting enough money to buy new equipment, grow their business, or increase production without running out of cash or slowing down cash flow. But growth and modernization need money to happen. That’s why it’s important for business owners who want to grow strategically to know about all the different ways they can get money. In this article, you’ll learn what financing for a manufacturing business means, look at a wide range of funding options, think about the requirements for getting funding, look at industry trends for 2025, and leave with useful information that will help you choose the right funding path, maybe with the help of a partner like ICG Funding.

What Is Financing for Manufacturing Businesses?

“Manufacturing business financing” is a term that refers to different types of outside funding that help manufacturers, especially small and medium-sized businesses (SMEs), pay for things like equipment, machinery, facility expansion, working capital, or other investments that will help them grow. Businesses don’t use their existing cash reserves; instead, they get loans, leases, or other types of financing to spread out costs over time, keep cash on hand, and better manage cash flow.

When done right, this type of financing lets you buy the tools and resources you need right now and pay for them over a long time, ideally in line with your revenue growth.

What This Kind of Financing Can Do for You

There are many benefits to getting outside funding to buy new equipment or grow your business, especially for manufacturing companies. Some of the most important benefits are:

• Keep working capital: Instead of spending a lot of money up front, you keep cash on hand for operations, emergencies, or buying raw materials.

• Manage cash flow in a way that is easy to plan for: Regular payments instead of one big bill make it easier to plan your budget.

• Get to high-value assets sooner: You don’t have to wait until you’ve saved enough money to buy expensive equipment or upgrade your machines.

• Possible tax and accounting benefits: Depending on where you live and how your loan is set up, equipment financing may let you take depreciation deductions, write off taxes, or get other benefits.

• Spread risk: If demand drops suddenly, you don’t lose all your money in a bad investment; you just keep making your scheduled payments.

• Growth that can be scaled: Financing lets you grow your business to meet demand instead of being limited by your current cash flow.

Best Ways for Manufacturing Businesses to Get Money

Here are some of the most common ways for manufacturers to get money to buy equipment or grow their businesses:

Loans from government programs for small businesses, like the U.S. Small Business Administration (SBA) 7(a) and 504 loans

• Purpose: to buy equipment or property, expand a business, get working capital, or refinance.

• Who can get it: Small or medium-sized manufacturers that meet the SBA’s size requirements, can show that they are making money or have stable operations, and can show that they can pay back the loan.

• Pros: Small manufacturers can get long repayment terms, low interest rates, and structured repayment schedules. In some cases, like FY2025, they don’t have to pay any fees up front.

• Disadvantages: It needs paperwork, collateral, or a personal guarantee, and the approval process can take longer than with simpler options.

Loans or leases for equipment or traditional equipment financing

• Goal: Buy machines, vehicles, or other physical assets that are used in production.

• Who can apply: Businesses that have a steady cash flow, can provide collateral (often the equipment itself), and have been in business for a while.

• Pros: It’s usually easier to get than an unsecured loan; the equipment acts as collateral, which lowers the risk for lenders; and the repayment terms are flexible, lasting from a few months to 5–10 years.

• Cons: If you don’t pay, you could lose the equipment; monthly payments are a set obligation; and interest rates or lease terms can change a lot.

Loans for working capital or business lines of credit

• Purpose: Pay for day-to-day costs, cover inventory, pay salaries, fill in cash-flow gaps, and help the business grow until sales pick up.

• Businesses that make money on a regular basis, have a good credit history, and have a history of making money are eligible.

• Pros: You can borrow what you need when you need it, which gives you more freedom. It can also help with seasonality or cash flow that isn’t always predictable. It’s not as strict as long-term loans.

• Disadvantages: They usually have higher interest rates than secured equipment loans, and if you use them for a long time, the interest costs can add up.

Lending based on cash flow or revenue

• Purpose: To get money for growth or working capital based on expected future revenue instead of fixed assets or collateral.

• Who can apply: Businesses that make regular sales or have a steady stream of cash, but may not have strong collateral or a long history of good credit.

• Pros: Flexibility, which is great for businesses that are growing quickly; lenders care more about making money than about assets.

• Cons: It can be more expensive (higher effective interest rates), and payments are based on sales, which can be risky if sales drop.

Financing for invoices and accounts receivable

• Purpose: Get cash out of unpaid bills so you can use it right away as working capital.

• Who can apply: Manufacturers or distributors who have unpaid bills from creditworthy customers but need money right away.

• Pros: Quick access to cash, helps keep cash flow steady, avoids long waits for payments, and is great for filling in the gaps between production and payment.

• Cons: It can be costly (due to fees or high factoring rates), it lowers the profit margin, and it may make you reliant on factoring instead of building capital.

Merchant Cash Advances (MCAs)

• Purpose: For businesses that need cash quickly in exchange for some of their future sales.

• Who qualifies: Businesses that make a steady amount of sales, especially those that take credit or debit cards, but might have bad credit or not enough collateral.

• Pros: Quick funding, easy application, little paperwork, and flexible repayment based on sales.

• Cons: Usually one of the most expensive ways to get money; the overall cost is high, especially if sales drop; it could put a strain on cash flow.

Mixed approaches (hybrid financing)

Sometimes manufacturers use a combination of things, like an equipment loan to buy machinery and a line of credit for working capital, or factoring to help with cash flow while they ramp up production of equipment. This balanced approach helps keep risk and liquidity in check.

How to Get Qualified

There are a few things that affect whether or not you can get manufacturing financing. Even though different lenders and loan types have different requirements, some of the most common ones are:

• Time in business: Lenders prefer businesses that have been around for at least one or two years.

• Stable revenue and cash flow: Steady sales or contracts show that you can pay back what you owe.

• Credit score or credit history: The credit history and score of the owners are important for both business and personal credit.

• For secured loans, collateral or assets are often needed. This could be equipment, receivables, or personal guarantees.

• Documentation: current financial statements, cash flow forecasts, business plan, quotes/invoices for equipment, and sometimes tax returns or balance sheets.

• Business purpose: A clear plan for how the money will be used—growth, machinery, expansion, working capital—that gives lenders confidence that the business will succeed.

If you meet these requirements, you are a lower-risk borrower and can get better terms, like lower interest rates, longer terms, and smaller down payments.

Trends in business for 2025

As of 2025, manufacturing financing is being shaped by a number of important trends:

More businesses are borrowing money to buy equipment. A recent report says that U.S. businesses borrowed 5.7% more for equipment in October 2025 than they did in the same month last year.

This shows that companies are spending a lot of money on capital, which could be because they are hopeful about the economy or have plans to grow.

Interest rates for manufacturing loans are generally good. For many small-business loans, interest rates are currently between 5% and 12%, depending on how stable the business is and what it has to offer as collateral.

More fintech and alternative funding use: More and more, online lenders and fintech platforms are offering equipment financing, revenue-based lending, and flexible lease-to-own options. Sometimes, they even approve loans faster.

More and more lenders are offering flexible payment and financing options, like deferred payments, seasonal payment plans, or lease-to-own setups. These are helpful for manufacturers whose demand or cash flow changes over time.

Long-term government-backed loans that are easier for small and medium-sized businesses to get: Small manufacturers are finding programs like 7(a) and 504 loans more appealing, especially since recent fee waivers have made the upfront cost less of a problem.

How to Pick the Best Way to Get Money

The best way to get financing for your business depends on its needs, financial health, and plans for growth. This is how to make a choice:

What is your goal? Are you buying equipment that will last a long time, need working capital, or want short-term bridging? Loans for equipment or government-backed loans are better for assets. Lines of credit, factoring, or MCAs are better for working capital.

Look at the costs and benefits: Compare the interest rates, total cost of repayment, payment schedule, flexibility, and risks (like losing collateral).

Match repayment to revenue cycle: If your business’s income changes with the seasons, look for repayment options that are flexible, like revenue-based financing or seasonal repayment schedules.

Put collateral and stability first: If you have strong assets or cash flow, look for lower-cost secured loans. If not, look for other options, but be aware that they may cost more.

Think about the future: Long-term loans (like the SBA 504) or equipment financing with ownership at the end are usually better than short-term, high-cost options for big purchases that will last for years.

Use mixed financing: Sometimes the best balance is a mix of options, like a long-term loan for equipment and a line of credit for working capital.

Final Tips

Always have a clear business plan that shows how the money will be spent and how repayment will fit into the cash flow.

Keep your financial records neat and organized; lenders like to see that they are clear and trustworthy.

Don’t borrow more than you need; only borrow what you really need, and try to stay away from short-term debt that costs a lot.

Plan for the unexpected. Make sure you can still make payments, even when business is slow.

Frequently asked questions