What interest rates and typical terms do manufacturers get?
The short answer — typical rates and terms for UK manufacturers
Most established UK manufacturers can expect annualised interest rates broadly ranging from about 6% to 20%, depending on the facility, security, and credit profile. Terms usually span 3 months to 7 years, with shorter durations for working capital or invoice-backed facilities and longer durations for asset-backed or term loans. Strong balance sheets, collateral, and consistent cash flow generally deliver lower pricing and longer terms.
Headline ranges manufacturers commonly see
Secured term loans often sit around c. Base Rate + 3% to +9% with 1–7 year terms, while unsecured loans can be in the low- to mid-double-digit APRs over 1–5 years. Asset finance (hire purchase or leasing) for machinery and vehicles frequently ranges around 6%–14% APR equivalent over 2–7 years.
Invoice finance typically carries a discount margin of c. 2%–4% above base plus a service fee of c. 0.2%–1.5% of turnover, with rolling 12-month agreements and 80%–95% advance rates. Short-term cash flow products, merchant cash advances, and revenue-based finance may cost more, often equivalent to 20%–60% APR, repaid in 6–18 months.
Important context before you compare
All figures are indicative, vary over time, and depend on lender appetite, market conditions, and your business profile. Pricing can move quickly with changes in funding costs, risk trends, or sector dynamics such as energy prices and supply chain risks. Best Business Loans does not lend; we introduce you to suitable lenders or brokers so you can compare terms and make an informed decision.
Responsible information
Rates and terms are subject to status, credit approval, and underwriting. Security, a personal guarantee, and fees may be required, and missed payments can affect your business’s credit rating. Facilities are for business purposes only.
What drives the rate and term a manufacturer is offered?
Manufacturing is capital-intensive and cyclical, so lenders look closely at cash conversion, asset quality, and demand stability. Your pricing and terms reflect a mix of risk, security, and utilisation factors. The stronger each element is, the more favourable your outcome tends to be.
Core underwriting factors
Financial strength: profitability, leverage, liquidity, and interest cover across the last 2–3 years, plus up-to-date management accounts. Cash flow predictability: order book visibility, customer concentration, seasonality, and debtor quality. Sector and product dynamics: exposure to commodity and energy prices, input cost volatility, and regulatory or technological change.
Security package: value and quality of assets available as collateral, including plant, machinery, vehicles, or receivables. Trading history and conduct: years trading, Companies House filings, CCJs, and banking conduct. Ownership and governance: director experience, succession planning, and operational controls.
Facility-specific considerations
Asset finance: age and resale value of equipment, deposit size, and end-of-term structure. Invoice finance: debtor quality, contractual terms, dispute levels, and ledger diversification. Working capital loans: purpose, repayment source, seasonality, and the strength of your internal controls.
Market and pricing mechanics
Most lenders price from a benchmark (for example, Bank of England Base Rate or SONIA) plus a risk margin. Arrangement fees, documentation fees, and, where relevant, valuation and legal costs can apply. Early settlement options, overpayments, and utilisation levels can also influence overall cost.
Typical rates and terms by finance type for manufacturers
Below is a plain-English snapshot of what many established manufacturers see in the market. These are generalised ranges and not an offer or guarantee. Actual pricing and terms will depend on your business specifics.
1) Secured and unsecured term loans
Secured loans: often from c. Base + 3% to +9% with typical terms of 1–7 years, depending on security coverage and credit. Unsecured loans: usually higher-cost, often in low- to mid-double-digit APRs over 1–5 years, with lower maximum loan sizes. Use cases include CAPEX, automation, line upgrades, and expansion projects with clear payback.
2) Asset finance (hire purchase and leasing)
Indicative APR equivalent often around 6%–14%, with 2–7 year terms aligned to asset life. Deposits of 5%–20% are common, and balloon payments may reduce monthly costs but increase total interest. Works well for CNC machines, fabrication equipment, forklifts, vehicles, and production lines.
3) Invoice finance (factoring or invoice discounting)
Discount margin: c. 2%–4% above base, applied to funds in use. Service fee: typically c. 0.2%–1.5% of turnover, based on ledger size and complexity. Advance rates commonly 80%–95% of invoice value with 12-month rolling agreements, concentration limits, and audit rights.
4) Working capital and revolving facilities
Business overdrafts and lines: pricing varies widely but often sits at a margin above base with annual renewal fees. Short-term cash flow loans: often 10%–30%+ APR equivalent, terms 3–24 months, and rapid approval. These can bridge seasonal dips, raw material pre-buys, or unexpected cost spikes.
5) Merchant cash advance and revenue-based finance
Total payback factors typically 1.2–1.5x of the advance, repaid via a fixed percentage of card or revenue takings. The effective APR can be high (often 20%–60%+), but the flexible repayment profile suits volatile sales cycles. Typical durations are 6–18 months depending on turnover.
6) Trade and import finance
Indicative costs can include a facility fee plus c. 1%–4% per 90–120 days for letters of credit, purchase order finance, or supplier payments. Terms align to transaction cycles, usually 30–180 days. Lenders assess supplier credibility, shipping risk, and exit via invoice or sale proceeds.
7) Asset refinance and capital release
Using owned equipment as collateral can unlock funds at pricing closer to secured lending ranges. Terms often 1–5 years, aligned to asset life and secondary market value. Useful to consolidate debt or fund growth without selling core machinery.
Government-backed schemes
Where available, schemes such as the Growth Guarantee Scheme can support eligible businesses via participating lenders. Rates and fees are set by individual lenders and remain subject to underwriting, with the guarantee benefiting the lender, not the borrower. Personal guarantees and security may still be required.
How manufacturers can improve rates and terms
Preparation and presentation are as important as your past performance. Focus on clarity, evidence, and risk reduction to influence the offer. The aim is to reduce perceived risk and increase lender confidence in the source of repayment.
Strengthen your application
Provide up-to-date management accounts, cash flow forecasts, and a realistic funding rationale with payback math. Show ledger quality in detail: aged receivables, disputes, credit limits, and debtor concentration mitigation. Evidence operational resilience: supplier diversification, energy hedging, and inventory risk management.
Offer security where practical, including plant and machinery schedules with valuations or original invoices. Consider deposits for asset finance to lower monthly costs and risk. Prepare a capital expenditure plan that links investment to productivity, yield, or margin improvement.
Demonstrate management control
Highlight governance, quality certifications, and maintenance regimes that protect asset value. Track KPIs such as OEE, scrap rate, changeover time, and on-time delivery to show process control. Share a customer pipeline with contracts, frameworks, or multi-year agreements where relevant.
Optimise the facility choice
Match term to benefit life: fund multi-year assets over 3–7 years; use shorter facilities for working capital. For export-heavy manufacturers, consider trade finance to bridge pre-shipment gaps. If most sales are B2B on terms, invoice finance may reduce overall cost versus unsecured cash flow loans.
Illustrative example (for guidance only)
A precision engineering firm with stable margins, ISO accreditation, and a diversified blue-chip ledger seeks a CNC upgrade. With a 10% deposit and strong coverage ratios, it secures asset finance around high single-digit APR over 5 years. The lender is comfortable given evidenced productivity gains that cover repayments from month one.
FAQs, next steps, and key takeaways
Below are clear answers to common questions manufacturers ask when comparing finance offers. These are not quotes or offers and are provided to help you assess options. Always compare total cost, fees, and terms before committing.
FAQs about manufacturing finance rates and terms
What’s a “good” rate for a manufacturer? A “good” rate is the lowest total cost that fits your risk profile, security, and facility type, not just the headline APR. Secured or asset-backed options usually price best for established firms.
How long can manufacturers borrow for? Asset finance and secured loans often run 2–7 years, while working capital options are shorter at 3–24 months. Invoice finance is a rolling facility, typically under annual contracts.
Do lenders fund older machinery? Yes, subject to age, resale value, and condition, though pricing may be higher and terms shorter. Independent valuations can help unlock better structures.
Can I combine facilities? Many manufacturers blend term loans or asset finance with invoice finance for day-to-day cash flow. Blended funding can lower overall cost versus a single unsecured facility.
Will a personal guarantee be required? It’s common, especially for SMEs or unsecured lending, but not universal. Asset-backed structures and strong security can reduce PG requirements in some cases.
Where Best Business Loans fits in
Best Business Loans does not supply finance directly. We use AI-driven matching and a professional network to introduce you to lenders or brokers that align with your sector, profile, and funding purpose. You stay in control, comparing terms and deciding the right route for your business.
If you operate in manufacturing and need tailored guidance, explore our sector resource on manufacturing business loans. It outlines common facility types for fabricators, CNC shops, food producers, and engineering firms. You can then submit a Quick Quote to check potential eligibility.
Next steps — simple, transparent, and fast
Complete a Quick Quote with your company details, funding purpose, and desired amount. Our system analyses your profile against available options and introduces you to relevant providers. There is no obligation, and your initial enquiry is free.
Important compliance and fairness notes
All financial decisions carry risk, and the information above is general and for guidance only. Any finance you take will be subject to lender assessment, terms, and conditions, and may require security and personal guarantees. Ensure you can afford repayments; missed or late payments can affect your creditworthiness and business operations.
Key takeaways for manufacturers
Typical rates: c. 6%–20% annualised for established manufacturers, varying by facility, security, and credit profile. Typical terms: 3 months to 7 years, aligned to purpose and asset life, with invoice finance operating as a rolling facility. Better outcomes come from strong financials, quality collateral, clear payback, and the right facility mix for your cash cycle.
Updated: October 2025. Figures are indicative, subject to change, and not an offer. Best Business Loans is an independent introducer and does not provide lending directly.