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Need To Know

Financing and Funding

Often a major stumbling block for print companies looking to make new kit purchases, what financing and funding options are available to businesses to help them push ahead with investment?

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Look After the Pennies

Walking the aisles of The Print Show just a couple of months ago, one thing was abundantly clear: people are buying new kit. Whether this is a new wide-format printer to support their expansion into a new market or taking on additional finishing technology to offer new effects to customers, new machines are being snapped up across all areas.

This can only be good news for a sector that was hit hard during the pandemic as demand for certain work dried up, with many manufacturers and suppliers supporting companies with their investments by offering certain funding and financing arrangements.

Add in third-party options from specialist financing businesses and this can help open doors to new purchases for print companies of all kinds. Here, we highlight recent examples of funding and financing in practice and present some of the options available to those in the UK industry.

A Tough Market

Compass Business Finance is an independent finance company specialising in asset-based lending to the print and packaging sector. Director Jamie Nelson explains that with asset-based finance having increased 6% in October, this reflects an overall rise in confidence across the UK market. However, he says the situation is not quite the same in the print sector.

Compass Business Finance specialises in asset-based lending to the print and packaging sector

“For the print market, investment has slowed, perhaps in part because we have Drupa on the horizon,” Nelson says, adding: “However, the market is tough. We’ve been working with customers on various projects, including debt restructuring, MBOs and acquisitions, as well as direct investments.

“During the past year, we’ve seen a lot more investment decisions being driven by potential energy savings and workflow efficiencies. Sustainability is high on the agenda for many businesses, especially where it has the ability to help them win more contracts. The majority of investment we’ve seen has been in sustainable large-format and packaging applications.”

So, what can Compass offer to help print companies overcome the financial stumbling block with new investment?

Regardless of whether times are buoyant or tough, Compass is able to support customers through a range of funding solutions, whether they are making investments or looking to improve their own cash position.

“We take a relational rather than transactional approach to doing business, valuing our team, our customers, and our partners so that we can provide the best possible products, service, and experience now and into the future,” Nelson says.

In addition to what Compass does, Nelson says there are tax incentives in place to encourage continued investment. Such schemes run alongside the Recovery Loan Scheme (RLS) and help to support lending to businesses that may otherwise not be able to attain the funding they need. However, it is worth noting that the pandemic-linked RLS is currently due to end on June 30th next year, with those interested advised to move sooner rather than later to avoid missing out on this type of funding.

Support from Manufacturers

So, we have established that funding and financing is readily available, but what about how this works out for PSPs? The proof is very much in the pudding with plenty of PSPs having made use of financing in recent months to support their business growth plans.

Some manufacturers have started to reach out to support customers with their growth plans. One example of this is personalised packaging start-up Penny Black, which has secured major backing from Agfa.

Agfa committed to an initial investment of £1.3m in October 2022, following on from this with a further £1.5m pledge. Both investment funds were triggered by numerous partnerships and wins across the UK and Europe, with the business having shown steady month-on-month growth, attracting several new customers. Among these clients are sustainable toothbrush retailer SURI, gin brand Warner’s Distillery, and health supplements retailer Zooki.

A key part of Penny Black’s success has been its marketing SaaS tool for e-commerce brands, with this already being deployed across Europe by global fulfilment providers like Radial, Elanders, I-Fulfilment, and Schroeders.

“3PL companies currently struggle to personalise e-commerce packages and can’t do much beyond mass-printed, one-design, gift notes thrown inside,” Penny Black chief executive Douglas Franklin explains, continuing: “Our unique offering helps automate a revenue-boosting process for on-demand, beautifully designed printouts, specifically geared towards each customer, location, product, or package.

“The moment consumers receive their online orders is the only touchpoint left for e-commerce brands to have a physical connection with them. Brands need to surprise and delight customers to secure their loyalty, especially when acquiring new ones can be so expensive.

“Riding the wave of global growth in e-commerce, we’re delighted to be attracting more interest, and this latest boost in investment will help us develop even further.”

Banking on Support

In perhaps a more traditional way of bringing in financing, Manchester-based Browns Print secured more than £2.4m in asset financing from Lloyds Bank. The funds were used as a hire purchase loan for a new, state-of-the-art printing machine.