Funding for manufacturing businesses

Manufacturing is entering a new era. Digitalisation, automation and AI, sustainability requirements and shifting global trade dynamics are reshaping how UK manufacturers operate.

Yet while demand for high-quality, UK-made products remains strong, the sector is grappling with rising costs, labour, supply chain pressure and the need for ongoing capital investment.
We work closely with manufacturing businesses across the UK and we see first-hand how access to the right funding can make an enormous difference – whether you’re upgrading machinery, managing working capital swings, or looking to seize new market opportunities.

Challenges facing UK manufacturers

Recent years have added significant strain to operations across the sector. Many manufacturers are currently balancing: 

• Supply chain disruption and higher logistics costs. Continuing delays, friction at borders and increased transport costs continue to impact production schedules. 
• Rising wage and training costs. Skills shortages and regulatory changes are driving higher labour costs, as well as bigger training and succession planning commitments. 
• Energy price volatility. Even with some recent stabilisation, energy is still a major and often unpredictable cost component for manufacturers. 
• Rates and property costs. Larger premises often mean missing out on small business rates relief. 
• Pressure to modernise and digitalise. Investment in automation, smart machinery, robotics, and sustainability improvements is increasingly essential to remain competitive. 
• International competition and export challenges. Overseas competitors, plus post-Brexit border friction, can make exporting more complex and costly.

Against this backdrop, working capital and access to finance have become critical drivers of resilience and growth. This sits against a shifting interest rate landscape, where the base rate has recently fallen from 4% to 3.75%, with the next scheduled review on 5 February 2026.

Investment needed

Manufacturers are responding to these challenges and we’re seeing strong investment across three core areas:

Digital transformation and new machinery

• Smart machinery and automated equipment 
• Robotics and production line upgrades 
• R&D and innovation programmes 
• Property improvements to accommodate new workflows or energy-efficient systems

This investment supports higher productivity, lower wastage and improved sustainability performance.

People, skills and workforce stability

• Training and upskilling 
• Apprenticeships 
• Adjusting wage structures 
• Attracting new talent to meet the UK skills agenda

With chronic skills shortages in many technical roles, investment in people is a priority.

Marketing, brand profile and new markets

• Social media and digital marketing 
• Export development 
• Brand repositioning or product diversification 

As international competition intensifies, visibility and market expansion matter more than ever.

Funding options

The manufacturing sector benefits from a wide range of financing products – from short-term working capital to longer-term facilities for major investments.

Short-term funding to support day-to-day cash flow can include: 

• Working capital loans – Fast to arrange and typically unsecured, these loans help bridge short-term cash gaps. Useful during peak production cycles or when waiting for customer payments, though generally not the lowest-cost option. 
• Invoice finance – Ideal for manufacturers with strong recurring customer relationships or long payment terms. You can release cash quickly from outstanding invoices, either selectively or across your full ledger. 
• Revolving credit facilities – A more flexible alternative to overdrafts. Funds can be drawn and repaid as needed, helping to smooth out fluctuations in cash flow.

Long-term funding to support investment and growth can include: 

• Asset finance – Designed for purchasing machinery, vehicles, production equipment, fixtures and other physical assets. The asset itself often acts as security, and repayments are spread over a fixed term.
• Term loans – Straightforward borrowing that can be used for expansion projects, process upgrades, or R&D investment. Rates and availability depend on your credit profile.
• Property finance – For businesses purchasing or refinancing commercial premises, often with longer repayment terms. Useful for manufacturers wanting control over their space and long-term stability.

How Kreston Reeves can help

We recognise that every manufacturing business is different with the right funding depending on your production model, customer credit cycles, growth plans and how quickly you need access to capital.

As advisers with deep involvement in the manufacturing sector, we can help you: 

• Identify the most suitable finance options 
• Compare products from a wide range of lenders 
• Prepare forecasts and applications 
• Strengthen your financial position and credit score 
• Build a long-term funding strategy aligned with your business goals

If you’d like to explore your funding options or get support with cash flow planning, we’re here to help. Get in touch with our dedicated Funding team here.