Corporate Trends

Top 5 Reasons CFOs Finance Food & Beverage Manufacturing Equipment

4-Minute Read

With the growing demand for high-quality food and beverages, many companies are seeking ways to increase their production and efficiency while staying competitive. Financing provides an attractive solution to these challenges.

Manufacturers and executives who are looking to expand their production capacity, upgrade their equipment, or streamline their operations do well to recognize that they can better manage their businesses and plan for growth with well-structured financing solutions.

Why should I finance food and beverage equipment? Cash is out – financing is in.

Let’s take a look at five good reasons to finance, as well as some of the specific types of food and beverage equipment that are often good candidates for loan acquisitions.

EFFI Finance recently helped a big box food manufacturer secure $11.5 million funding for a multi-faceted production line and packaging solution.

Reason 1: It’s time – COVID is ‘officially over’ and the equipment is overdue for upgrade

Upgrading equipment in the food and beverage industry can bring numerous benefits, such as increased production efficiency, improved product quality, and reduced operational costs. Modern equipment is often created with the latest in automation and even energy-efficient capabilities. These benefits can lead to more accuracy and efficiency in processes and green initiatives and even reduce the business’ carbon footprint.

Related: Funded Project for BigBox Food Manufacturer: $11.5 Million

By financing your equipment, you can upgrade to newer, more efficient models that can increase productivity and help streamline your operations.  The ops team will be much happier and more efficient.

Financing can help businesses upgrade their equipment by spreading the cost over time, rather than paying for it all upfront. This eases the financial burden of acquiring new equipment and frees up capital for other business expenses.

Reason 2: Save Cash – Use financing: it’s not as expensive as you think

Financing food and beverage equipment can help preserve a business’s capital by allowing them to spread the cost of the equipment over time, rather than one lump sum. This can help businesses avoid dipping into their savings or taking out large loans that could negatively impact their financial stability.

We offer financing solutions for industries ranging from aviation to food and beverage, with funding from $500,000 to $20,000,000.

The preservation of capital is crucial for the achievement of any enterprise’s goals, as it offers a cushion for unexpected expenses and guarantees long-term financial stability. By financing food and beverage equipment, companies can preserve their capital and reinvest it in their business to drive growth

Having a strong financial foundation can also help businesses weather economic downturns and increase their competitiveness in the industry. By preserving capital, businesses take control of their financial future and build a more resilient, successful company.

Reason 3: ‘Cashflow is King’ – match the useful life with the payback strategy

Spreading the cost of equipment over time is one way to free up cash reserves, but providing a business with access to more advanced equipment has the potential to provide substantial return. Supplying teams with the best equipment available can provide an increase in operational efficiency, improvement in competitiveness, and an overall increase in its profitability.

Financing your food and beverage equipment allows you to preserve your working capital and avoid a large upfront investment. This can help you maintain a positive cash flow and improve your financial flexibility.

Reason 4: Tax Benefits – up to 80% of the total cost Deductible – use it before we lose it.

The tax benefits of financing equipment can have a positive impact on the business by reducing its tax liability and freeing up more cash resources for other expenses or investments. Cost of equipment and financing payments can be deductible as business expenses. Additionally, financing can also provide the business with access to the most up-to-date equipment, which can increase its operational efficiency and improve its competitiveness.

Tip: Section 179 Deduction is an expense deduction that allows businesses to deduct the full purchase price of qualifying assets like equipment from taxable income. The deduction will be reduced from 80% to 60% in 2024.

EFFI Finance supports industrial refrigeration upgrades with Well-Financed solutions for improved productivity and efficiency.

Reason 5: Improved Scalability to Crush your Competition

As a business grows and expands, its needs for equipment can change rapidly. As we’ve mentioned, financing allows a more flexible payment schedule in certain circumstances. It makes it easier to acquire equipment you need, but with more cash flow, savings, and better production efficiency, a business’ ability to scale also becomes more realistic.

Put a meeting on our calendar to speak with the EFFI team today.

Having access to the latest and greatest equipment in the food and beverage industry can give you a competitive advantage over other businesses and help you stay ahead in your market.

Which types of equipment are best suited for financing? All of it, well, almost:

Here’s just a few examples of specific types of equipment that we finance. CEO’s and CFO’s in the industry will recognize these assets:

  • Production lines for bottling, canning, or packaging
  • Industrial mixers and blenders
  • Industrial ovens and cookers
  • Industrial refrigeration systems
  • Conveying and material handling systems
  • Processing and treatment systems, such as water filtration and wastewater treatment
  • Robotics and automation systems for food production and packaging
  • Specialized equipment for quality control and testing
  • Energy-efficient upgrades, such as LED lighting and HVAC systems

The exact cost will vary based on individual business needs. However, if you require any of the equipment listed above, acquiring through a loan has the potential to deliver more return on your investment.

We’ve financed well-crafted $100MM deals for new food production & packaging lines.

In conclusion, financing food and beverage manufacturing equipment can provide a multitude of benefits to businesses, including equipment upgrades, capital preservation, improved cash flow, tax benefits, and improved scalability. By financing food and beverage equipment, businesses can build a strong financial foundation and drive growth for long-term success.

Related Reading: 5 Corporate Debt Refinancing Tips for Growth, Acquisition Power & Cash Flow