Need Capital for Your Packaging Plant? Financing Tips for Plastic Manufacturers

Demand for plastic packaging is surging, driven by e-commerce growth, sustainability efforts, and shifting trade policies. Tariffs on major plastic exporters are creating new opportunities for U.S. manufacturers.

However, these tariffs also pose challenges, especially for companies relying on imported plastic parts, potentially raising production costs.

Whether you're seizing new opportunities or navigating higher input prices, plastics equipment financing can help bridge the gap. It can provide the capital needed to expand facilities, invest in automation, and stay competitive in a rapidly evolving market.

We’ll outline how you can get the funding you need to grow your plastics packaging plant and achieve long-term success.

What Plastics Equipment Financing Can Do For Your Packaging Plant

Plastic manufacturing is essential for producing many products, from food packaging to car parts and healthcare equipment. As the owner of a plastics packaging plant, you play a vital role in getting much-needed products into the hands of consumers.

Plastics equipment financing can be a lifeline for upgrading outdated machinery and buying new equipment. It can also help you scale your operations, expand your facility, start new production lines, or adopt new technologies.

An equipment loan can help finance plastic machinery, such as:

• Injection molding machines and equipment

• Optical scanners and other advanced inspection tools
• Crushing and grinding machines
• Cutting machines
• Cooling systems
• Dryers
• Thermoformers
• Extrusion equipment
• Automation machinery
• Blow molding automation
• Robotics
• Recycling equipment
• And other manufacturing equipment

These advanced manufacturing machines and processing equipment are crucial for plastics operations. But they come with a high cost. Most plastics manufacturing companies are unable to cover these expenses without financing. Securing funding can help with working capital and maintaining your business’s cash flow for its daily operational needs.

Plastics equipment financing can also help you get the latest innovations. Newer equipment is more energy efficient and can result in higher and faster production yields. Both are key to thriving in a modern plastics production landscape.

When seeking funding for advanced plastic machinery, it’s essential to choose an experienced provider familiar with the plastics industry.

Financing Options for Advanced Manufacturing Machines

There are several plastics equipment financing solutions to choose from when exploring your options for new or used equipment.

Equipment Loans

An equipment loan is one of the best options for purchasing plastic manufacturing equipment. It’s also relatively easy to get approved for an equipment loan. This is because the items purchased with the loan funds become collateral.

Depending on your credit, you might also be able to secure better terms. If you want to own your equipment outright, an equipment loan is a great option. There may also be some tax benefits with plastics equipment financing. Ask your CPA or a tax specialist for more information about how to deduct your equipment loan payments from your taxes.

Equipment Leasing

Leasing your equipment offers lower upfront costs; however, you don’t own the equipment. Some manufacturing equipment providers have options for you to buy the equipment once you’ve made all your lease payments. But whether you exercise the right to purchase or not, equipment leasing can mean higher long-term costs than purchasing equipment outright.

If your credit isn’t great, some vendors will be more flexible in allowing you to rent the equipment. Like plastics equipment financing, leasing also may offer tax advantages. However, consult a tax expert to learn how depreciation affects this.

SBA Loans

An SBA loan can be a cost-effective way to finance manufacturing equipment. Since the beginning of the year, SBA manufacturing loans have surged. Loan approvals for the SBA’s primary loan program have increased by 74%.

An SBA 7(a) loan usually requires a lower downpayment than a conventional lender or bank. Depending on the equipment’s useful life, the SBA sometimes allows a longer time to repay the loan. The downside is that the application process can take weeks or months.

Vendor Financing

Some vendors offer plastics equipment financing for manufacturers. This can be a convenient option for plastics manufacturers who want to avoid large upfront costs. While purchasing the equipment and financing in one place seems like a good idea, it’s essential to remember that it can limit your choices.

In-house financing can also lack transparency and have hidden costs. Many vendors structure their agreements more like a lease. This means you might not own the equipment until it’s paid off.

Tips to Securing Plastics Equipment Financing For Your Packaging Plant

1. Have a Strong Business Plan

Lenders will want to ensure that you have a realistic and clear strategy for your plastics manufacturing plant’s profitability.

Your business plan should outline your goals and include a market analysis and projected revenue. It should also include detailed financial forecasts to further show your business acumen.

Finally, explain how you plan to use the loan and how the equipment purchased will contribute to your business’s growth.

2. Build a Good Credit Profile

Lenders will look closely at your credit history when reviewing a loan application for plastics equipment financing. Ideally, you’ll have built good credit before needing funding. However, building your credit profile should always be a work in progress.

It’s wise to work towards improving your credit score so you can get the best loan terms. Strive to pay your bills on time, keep your credit utilization and debt-to-income ratio low, and consolidate excessive debt if it hinders loan approvals or more favorable terms. A higher credit score will get you the best interest rates, so you’ll pay less on your loans.

3. Maintain Solid Financial Records

Many lenders require financial documentation as part of the loan application process. This helps them assess your company’s financial health. Maintaining your financial statements also demonstrates to lenders that you are responsible and disciplined.

Review your financial documents regularly. This will make it easier when applying for business financing.

The list of financial documents required by lenders includes:

• Balance sheets
• Cash flow statements
• Profit and loss statements
• Tax returns
• Bank account statements

4. Stay Ahead of Trends

The plastics packaging industry evolves rapidly. It’s helpful to stay apprised of the latest trends and technology and adopt newer innovations where it makes sense.

Between innovations in materials, sustainability, and automation, adaptation is essential for success. It can also position your plastics manufacturing brand in a more favorable light to lenders who prefer more forward-thinking brands.

5. Work on Strengthening Vendor Relationships

In the manufacturing industry, much of your business will likely rely on vendor relationships. Cultivating strong relationships with suppliers and vendors can help you get discounts, more favorable pricing, and better terms when financing in-house.

Some of your credit-building also derives from vendors. So, it’s beneficial to nurture these relationships. A positive vendor relationship can also help during downturns when you need to renegotiate contracts to get better terms.

6. Choose the Right Financial Provider

Plastic manufacturers have unique needs. Between the changing market, supply chain issues, seasonal fluctuations, and advancements in the industry, it’s essential to work with a financial provider that understands the plastics industry.

Look for a provider with a demonstrated commitment to customer service and understanding business needs. It’s also wise to select a financial platform with flexible solution that are fine-tuned to fit your business model.

Biz2Credit’s automated business lending platform has provided fast funding for more than 200,000 small businesses. We aren’t just there for your current funding needs. We’re committed to your packaging plant’s long-term vision and growth. Contact us today!

Conclusion

When seeking plastics equipment financing for your packaging plant, the best solution is one that aligns with your immediate needs, long-term growth strategy, and credit profile. Whether you want to expand your production capacity, enter a new market, upgrade outdated equipment, or adopt new innovations, understanding your options is key.

Building strong credit, keeping up with industry trends, maintaining clean financial records, and having a rapport with vendors and lending partners will put you one step closer to success.

FAQs About Plastics Equipment Financing

What is an ideal credit score for plastics equipment financing?

While minimum credit scores may vary from lender to lender, the ideal credit score is always going to be the highest credit score you can achieve. Good credit increases your chance of getting financing and it can also help you get more favorable terms and lower interest rates.

What if I have a low credit score? Can I still get advance plastic machinery financing?

Some alternative loan platforms have flexible plastics equipment financing options, such as revenue-based financing, for business owners with lower credit scores. Other factors, such as how long you’ve been in business, what the funds are used for, and your business’s annual revenue, will also influence whether or not you get funded.

How hard is it to get startup funding for an advanced machine company in plastics manufacturing?

With the government’s “Made in America Manufacturing” initiative, it’s easier now than it was last year. The initiative is expanding funding and training for manufacturing plant entrepreneurs.

Besides a loan, what are some other plastics equipment financing available for a packaging plant?

Other types of plastics equipment financing include a business line of credit, commercial real estate financing, and revenue-based financing.

What are my options regarding lenders for plastics equipment financing?

Banks and the Small Business Administration (SBA) are options. However, be aware that these lenders work slowly during the application process. Alternative loan platforms (online lenders) offer faster funding.

Frequent searches leading to this page