Case Study

Brewery Equipment Finance

Company —
Independent Craft Brewery
Business Type —
Brewery
Requirement —
Line Machinery
Solution —
Lease Finance & Refinance

Brewery Uses Equipment Finance and Seeds Expansion into New Markets

Established in 2018, this business is a small, independent craft brewery based in Edinburgh, Scotland. With their mission to craft innovative and bold fruit-forward sour beers, the brewer’s commitment to quality and creativity quickly gained attention, and its beers earned praise from beer enthusiasts and critics alike. Learn how equipment finance allowed this brewery to keep up with rising demands and the opportunity to expand their business.

The Investment Decision

As this brewer’s reputation grew, so did the demand for its beers. The team realised that to meet the increasing demand and expand their reach, they needed to invest in a canning machine. Canning their products would offer several advantages, including improved portability, longer shelf life, and better protection from light and oxygen.

Challenges Faced

The brewer faced multiple limitations in their production capacity due to their manual bottling line. Meeting the increasing demand for their beers was difficult due to the time-consuming and labor-intensive manual process.

Additionally…

  1. Higher Packaging Costs: Bottling and labelling their beers by hand incurred higher packaging costs, which affected the brewery’s profitability. A canning machine, while providing long-term benefits, required a significant initial investment that the brewery couldn’t afford outright.

  2. Cash Flow Management: As a small business, this brewery faced cash flow fluctuations, making it difficult to allocate a large sum of money to purchase the canning machine without jeopardising their regular operations.

Solution – Leveraging Finance

To overcome these challenges, the brewer decided to leverage finance as a strategic tool to facilitate the purchase of the canning machine.

Through equipment financing, they approached a brewery equipment leasing company that specialised in financing brewing machinery. Obtaining canning machine finance allowed the brewery to access the equipment with a lower upfront cost and spreading the costs over a set period through monthly payments.

Benefits Realised

  1. Increased Production Efficiency: With the new canning machine, the brewer significantly improved its production efficiency. The automated process reduced the time required to package each batch, allowing the brewery to increase its overall output.

  2. Cost Savings: Canning proved to be more cost-effective than bottling in the long run. The reduced packaging costs per unit improved the brewery’s profit margins, contributing to sustainable growth.

  3. Expanded Distribution Reach: Canned beers offered better portability and a longer shelf life, making them ideal for distribution beyond the brewery’s taproom. This brewery was able to reach a broader market, including retail stores and online platforms, thus increasing their customer base.

  4. Brand Recognition: The visually appealing canned designs created a stronger brand presence for the brewery. The eye-catching labels and consistent packaging contributed to enhanced brand recognition and loyalty.

Challenges overcome

  1. Financial Flexibility: By opting for equipment financing and government grants, this brewery was able to overcome its limited cash flow and acquire the canning machine without depleting their working capital.

  2. Investment Risk Mitigation: Spreading the cost of the canning machine through leasing and grants helped mitigate the risk associated with a large capital investment. This allowed the brewer to test the new packaging format without committing all of their financial resources.

Conclusion

By using finance as a strategic tool, this Scottish Brewery overcame the challenges posed by limited production capacity and higher packaging costs.

The investment in the canning machine allowed the brewery to scale up, reach new markets, and bolster their brand presence.

Through thoughtful financial planning and support from their community, this small, independent brewer successfully fermented a recipe for long-term success, establishing themselves as a prominent player in the craft beer industry.

Partner with Portman, for a successful future

There are plenty of finance options out there for you, deciding which is right for you will take time and consideration. But why should you choose these financing options from Portman?

At Portman Finance Group we are focused on serving the needs of you and your businesses, and have been doing so for thousands of other businesses since 2007, raising over £1 billion in funding for UK SMEs. 

We take the time to truly understand your business and what you need, ensuring we secure the right funding for you. As both a broker and a lender, we can also offer financial options that others cannot. We promise you will have one point of contact from start to end, providing you solutions quickly, sometimes within hours.

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Hire Purchase

Hire purchase usually involves paying the VAT and a deposit up-front. Fixed monthly repayments are then made, affected by whether you pay off the entire loan over the term or chose a final balloon payment. The final option to purchase is guaranteed for a nominal fee, transferring ownership of the asset to the customer.

Hire purchase is well-suited for situations where a company definitely wants to own the item at the end of the term, often where the asset has a significant usable lifespan, a high residual value and will not need to be upgraded.

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Lease Finance

Equipment leasing allows a business to acquire hard or soft assets without the upfront costs associated with large purchases. A lender purchases the item, the business then leases it through fixed monthly payments over an agreed term.

Typically, asset finance is provided for high value ‘hard’ assets such as machinery, equipment, or vehicles, but Portman also arranges asset finance for ‘soft’ assets such as IT, fitness, catering, or vending equipment, as well as premises fit-outs, furniture or even air-conditioning.

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Business Loans

Business loans are a way of borrowing money, which is repaid in monthly instalments, including interest, over an agreed term. Business loans are a common way to help smooth out cashflow fluctuations and take opportunities where otherwise they could be missed due to a lack of working capital.

Business loans can be secured or unsecured. Portman typically provides unsecured loans which can be more flexible and do not require collateral but are likely to require a personal guarantee. Secured loans are tied to an asset which the lender can claim ownership of if repayments are not made, these may be used in equipment refinance deals.

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Start Up Loans

New businesses often need an injection of finance to get them off the ground. Asset finance for new businesses allows you to focus on running your company and bringing in customers, confident that you have the equipment, vehicle or stock you need without the large initial outlay.

Using finance for your equipment means that you preserve the credit card or overdraft for contingency and operating expenses when the unexpected happens.

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Equipment Refinance

If you recently bought a high-value item outright but would now prefer to have financed it, we can help with a sale-and-lease-back agreement. If the item is less than 3m old, give us a copy of the invoice and we will calculate the current value. After a few checks and acceptance of the term and monthly repayments, we can give you the cash equivalent of the invoice to put back into the business. You’ll then make fixed monthly payments including interest, whilst your asset earns you money.

If your business owns high value assets that are not currently on finance, subject to a valuation, it is also possible to use them as security for a loan, with lenders offering a cash loan up to a % of the asset’s value.

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Recovery Loans

Recovery Loans offer an excellent way of making sure your business gets back on its feet after the long-term effects of the pandemic and subsequent supply chain disruption. Businesses with turnovers up to £45m, including those who have previously benefited from the government’s CBILS, BBL or RLS, can apply.

Recovery Loans can be used for any legitimate business purpose or simply to provide cashflow. Rates are capped and the government continues to guarantee 70% of the outstanding balance, giving added security for lenders who are now able to consider finance for businesses who may have previously found it difficult to obtain.

Up to £2m can be borrowed on terms from 2 to 6 years. Your personal private residence cannot be taken as security.

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