Funding your investment in automation
Deciding on the optimum way to fund a business’s investment in automation is an important decision. In this section we teamed up with the advisory team at ifac to highlight some of the options available.
If you have made the decision to automate but you are encountering roadblocks such as rigid payment terms, contact us for flexible payment options.
Enterprise Ireland (EI)
- Operational Excellence Offer
This support has been designed to help companies address the competitive challenges they are facing through funding transformation projects that can include investing in the implementation of new and innovative production methods. Sample projects outlined by Enterprise Ireland include Production Line Redesign and Process Restructuring. The levels of support vary from 10% – 70% depending on the project.
- Capital Investment Initiative
This initiative supports EI client companies in investing in new equipment and technology to improve productivity and overall competitiveness. The level of financial support available is to a maximum of €250,000 per company.
- Sustaining Enterprise Fund
The Sustaining Enterprise Fund offers funding of between €100,000 and €800,000. As Irish food and agribusinesses deal with macro issues like Brexit and Covid-19, this funding can be used to stabilise cashflow, adapt operations and innovate to meet new customer needs.
Local Enterprise Office (LEO)
Business Expansion Grant (BEG)
For companies who may not fall into the Enterprise Ireland bracket another option to consider is the Business Expansion Grant from your LEO. The BEG supports 50% of the investment or €150,000, whichever is the lesser. The purchase of capital items and the associated innovation costs can be supported under the scheme if successful.
For rural businesses, LEADER is an option to consider before investing in automation. LEADER supports enterprises in delivering projects aimed at improving the diversification of economic activity in rural areas. Funding is available to a maximum of €200,000 and is 50% matched funding. For rural food businesses a specialised fund is available under the LEADER Food Initiative.
Údarás na Gaeltachta, Intertrade Ireland and a range of European funds can also support Irish SMEs in the food and agribusiness sector to help automate their businesses.
European Funding Programs
There are numerous funding programs in existence to support businesses based in Europe. Many of these depend on the stage of the manufacturing The European Commission Funding Page or contact us
- Term Loan
A term loan is regularly used to fund automation projects. It ensures that working capital is available for use elsewhere in the business. The useful life of the asset will influence the length of the loan secured. Your banking partner will be looking for key reference points including a business plan, your team and capabilities, cash to cash cycle time and repayment capacity when making the decision to support you. Ensuring you are aware and have these in place going to a bank will save time and energy.
- Asset Finance
Asset finance can be offered in several formats including Finance Leases, Hire Purchase and Operating Leases. A significant benefit of asset finance is that it can give you instant access to new assets that are required to grow your business without having to finance the initial up-front investment. Some providers may even take the seasonality of your business into consideration when assessing repayments.
There are a range of providers of asset finance including but not limited to AIB, Bank of Ireland, CapitalFlow, Close Brothers, DLL and Grenke.
- Linked Finance
Linked Finance is an alternative finance supplier who generally offer loans up to €300,000 over a 3-year period. Interest rates vary with a 6% per annum fixed rate available. Interest rates depend on credit grade applied based on your business circumstances, and the term required for the loan. Flender is a similar option to consider.
- Employment Investment and Incentive Scheme (EIIS)
In some specific circumstances EIIS funding has been used to invest in large scale automation of a business which will lead to increased job creation. One recent example saw a company in the sector use EIIS funding of €2m to invest in highly specialised processing equipment.
Funding out of cashflow
If you are in a position where it appears feasible to fund your automation project from company funds it is vital to take the necessary steps to ensure this move will not have a major negative impact on cashflow or reserves you may have in place for contingencies. Additionally, the opportunity cost of funding capex from cashflow must also be considered.
Universal Robots Finance
Reliance Automation together with UR Robots has launched a cobot leasing program in collaboration with DLL, a global vendor finance company giving manufacturers of all sizes an option to finance the purchase of UR Cobots.
With flexible payment options, payments can be scheduled to fit fluctuations in cash flow, upgrade to new equipment, or add cobots anytime during the contract term.
At the end of the finance term, customers will have the option to buy the equipment for a fraction of the original cost, upgrade to newer technology, extend the finance term or simply return the equipment.
If you would like to learn more about funding your automation projects you can contact us directly or connect with our friends at ifac, who can guide you along the funding of your automation journey. Below you can read a useful guide with finance and automation tips for your business especially prepared by Reliance Automation and IFAC Ireland.