Financing and Funding: Spend Money to Make Money

Money is often one of the primary stumbling blocks when it comes to new investment in the print industry. Print companies want to purchase new equipment, expand their workspace, or even add new vehicles to their delivery fleet. Unfortunately a lack of funds can stop them in their tracks.

However, there are plenty of sensible and effective financing options available to those in our industry, each offering companies the funding they need to proceed with their plans, with realistic repayment options.

Here, we speak with several specialists within this area to find out more about what is available to print companies to help them grow and expand their business without having to break the bank.

Support Your Growth Strategy

One of the stand-out names in funding support in the printing industry, Compass Business Finance, is well place to offer financial backing and advice to those looking to invest. Director Jamie Nelson says when planning for growth, finance can help bring forward projects whilst not impacting cash within the business, which is vitally important in a growing business.

“There are likely to be several options for how this can be achieved,” Nelson says, adding: “Key factors in your decision-making process will be the cost, speed, flexibility, and quantum – how you’re going to raise the capital required to put your ideas into practice, and how quickly the investment you’re making will pay for itself.

“Using external finance to support your growth strategy can help your business make more timely investments and have greater agility in responding to market conditions or opportunities.”

Nelson says financing is a realistic option throughout the life of each printing business; from start-up loans, overdrafts and cashflow support, to finance for larger projects or investments such as purchasing new equipment, making improvements to buildings, or acquiring another company.

When it comes to securing new funding, Nelson says it is worth looking at all options. He advises that the most direct route to accessing the finance you need may not always be the best one.

On this, he says Compass has seen a significant rise in the popularity of asset-based lending (ABL), which he says provides a strong alternative to more traditional banking facilities, often underpinned by invoice finance facilities and term loans, they can also include vehicles, equipment, property, and in some cases inventory.

“Over 35,000 UK businesses have now benefitted from this type of funding, and because of the way it’s securitised it’s often available at more favourable rates than any of its component parts,” he explains, continuing: “When considering a new project, it’s worth looking at your current agreements at the same time, as you may be able to bring everything together into an agreement that better suits your business.”

Growth Guarantee Scheme

While term loans and overdrafts are not currently as readily available as they once were, the number of alternative funding options from independent lenders and challenger banks are increasing to fill the gap, Nelson explains.

“We recommend talking to finance providers such as ourselves to explore what’s available, and to utilise independent information, such as that provided by the British Business Bank to establish what’s available,” he comments.

“There are investment funds available to support business growth in some areas of the UK, and the government has recently launched the Growth Guarantee Scheme (GGS), through the British Business Bank, working with accredited lenders, like Compass, to create further access to finance for UK smaller businesses to invest and grow.”

GGS is a government-backed loan scheme that enables lenders to provide finance where they may not otherwise have done so, or to extend better-than-standard terms on business financing options. The scheme supports access to a wide range of business finance products for UK businesses.

One of the key reasons for considering insurance for a print business is to manage and contain these risks

Products under the scheme offered by Compass include term loans of £25,001 to £2m for business groups, across terms of up to six years; asset finance for investments in new and used machinery; or other assets where the finance is secured primarily against the asset itself.

It also includes ABL, which is comprised of two or more types of finance being knitted together to achieve the overall funding package required; and invoice finance to enable applicants to access 85% to 90% of the value of their unpaid invoices the moment they are raised.

“We are delighted that the GGS includes the addition of asset-based lending and invoice finance to the supported facilities,” Nelson says, adding: “ABL typically provides significantly higher levels of working capital than conventional methods of funding, such as bank loans and overdrafts.”

Tying in with this subject is insurance and ensuring you have the right systems in place to protect you and your business. Howden Group works with print companies across the UK, assisting them with their insurance needs. The company will exhibit at The Print Show this year to speak with businesses visiting the show.

“One of the key reasons for considering insurance for a print business is to manage and contain risks,” explains marketing executive Emma Luxton, continuing: “Insurance provides a mechanism to protect owners and their business from financial loss due to unforeseen events. This can be achieved by simply offsetting risk liability in exchange for paying a premium to an insurer, who will accept the future unknown cost of an insured risk in line with the terms of the agreed policy.

“As insurance brokers that hold a strong knowledge and understanding of multiple areas of the print industry and the processes involved, Howden can assess a business’ specific risks, review our approved panel of insurers, and tailor a bespoke insurance package to protect a business’ investments and provide peace of mind.”

Luxton explains that a printer must ensure the company it is purchasing insurance from understands its business and the methods used in achieving any given task. She gives the example of how many underwriters will hear about UV curing in a production line and refuse cover due to fire risk, expecting large blacklight bulbs to be in close proximity to flammable materials.

“We understand that UV curing is now very much an LED process where the perils of fire are greatly reduced and we can explain this to the insurance underwriters on our panel, who welcome the opportunity to provide cover,” Luxton says.

With this, Luxton lists some of the policies print businesses should consider. These include a commercial combined package, directors’ and officers’ liability, personal accident and business travel insurance, fleet insurance, cyber insurance, engineering and inspection insurance, property owners’ insurance, and an excess layer policy.

“At Howden, we offer a print specific commercial combined policy, with extensions and covers designed specifically for the print industry,” Luxton says, adding: “Whether that’s printer breakdown, operator error, or bookbinders’ public liability, every part of a printer’s story is covered, offering solid protection to you, your team, your stock, and premises.”

While it is a lot to take in, printers can be rest assured that there are plenty of specialists in the financing and insurance sector to work with to ensure the best deal for your business. A visit to The Print Show this year to check out your options may also be beneficial.