Quick answer
Food manufacturers usually borrow for processing and packing equipment, cool rooms, minimum-order packaging runs, ingredients for large retail orders and the wait for customers to pay. Equipment finance covers most plant, invoice finance or a line of credit carries supermarket and wholesale debtors, and property-secured loans fund factory purchases or bigger expansions. Lenders focus on food safety certification, customer concentration, shelf life and whether margins hold once retailers take their share.
Key points
- Perishable stock is weak security, so lenders lean on your equipment, debtors and property rather than what's in the cool room
- Producers of GST-free basic food often sit in a GST refund position, because they pay GST on packaging and equipment but charge none on sales
- The Food and Grocery Code became mandatory on 1 April 2025 for grocery businesses with more than $5 billion in annual revenue, which matters to anyone supplying the major chains
- A product recall can wipe out months of margin, so lenders ask about recall plans, insurance and traceability
Food manufacturing has a cash problem that most factories don’t: much of what you make has a use-by date. A metal fabricator can leave steel on the rack for a year. A smallgoods maker, a sauce producer or a dairy processor has days or weeks to sell what’s made, and the ingredients, packaging and labour were all paid for before the first carton left the dock.
Lenders who know the sector look past the cool room to the things that last: the equipment, the customer contracts, the certifications and the property. This page explains how they think, and how to line up finance that suits a food business.
Five questions a lender asks every food producer
1. Who buys your product, and how much depends on one customer? Selling through independent grocers, food service distributors, cafés, export and online spreads the risk. Selling 70% of output to one supermarket chain concentrates it. Neither is wrong, but the second attracts more questions and sometimes a cap on how much of an invoice facility can rest on that customer.
2. What do you hold in certifications and licences? Retailer audits, HACCP-based food safety programs and, for some product types, a licence from your state’s food regulator are what keep you on the shelf. Lenders treat them as a sign the income is durable.
3. What’s the shelf life? Shelf life determines how much stock you carry and how much is at risk of write-off. Frozen, canned and dry goods give more breathing room than fresh dairy, meat or bakery products.
4. Do your margins survive the retailer? After promotional spending, rebates, freight and the retailer’s margin, what’s left? Lenders will look at your gross profit by channel if you can provide it.
5. What happens in a recall? FSANZ coordinates food recalls nationally, working with state and territory agencies, and recalls are published on its website. A recall means retrieving and destroying stock, refunding customers and sometimes losing a ranging. Lenders ask about traceability, your recall plan and product recall insurance.
What do food manufacturers usually borrow for?
| Need | Typical finance | Notes |
|---|---|---|
| Processing, filling, sealing and labelling machines | Equipment finance | Stainless food-grade gear from known makers resells well |
| Cool rooms, blast freezers, refrigeration | Equipment finance or term loan | Built-in refrigeration may be treated as a fit-out rather than a movable asset |
| Packaging minimum order quantities | Line of credit or short-term loan | Printed packaging often comes in runs far larger than one month’s needs |
| Ingredients for a large order | Trade finance or line of credit | Repaid once the order is delivered and paid |
| Supermarket and distributor debtors | Invoice finance | Releases cash tied up in 30 to 60 day terms |
| Factory purchase or extension | Commercial property loan | Long term, secured on the building |
Packaging is a trap many growing producers fall into. A custom printed pouch or carton might only be economical in a run of 50,000 or more, which can mean paying for six or twelve months of packaging upfront. Change a label requirement or a design and some of that stock becomes waste.
The GST refund pattern
Under the GST rules, most basic food for human consumption is GST-free, while prepared meals, confectionery, snack foods and some beverages are taxable. A producer of GST-free products charges no GST on sales but pays GST on packaging, ingredients that are taxable, machinery, power and services. The result is often a refund on every BAS.
That refund is real money, but it arrives after the period ends. A business on quarterly BAS waits up to three months to get it back; switching to monthly lodgement can bring it in sooner. Lenders sometimes see a producer’s statements dip before each refund and then spike when the ATO pays. If your products are a mix of GST-free and taxable lines, get your accountant to confirm the split, because classification mistakes can produce an unexpected debt later.
Already holding an order you can’t fund? Outline the order for us; your credit score stays as it is.
Supplying the supermarkets: what changed in 2025
Since 1 April 2025, the Food and Grocery Code of Conduct has been mandatory for supermarkets and grocery wholesalers with more than $5 billion in annual revenue, according to the ACCC. It sets rules on how those businesses deal with suppliers, including when they can require payments from suppliers for certain benefits and activities, and it carries significant penalties for breaches.
The Code doesn’t make supplying a major chain risk-free, and it doesn’t fix payment terms for you. But it does give suppliers a clearer framework for disputes, and lenders take some comfort from it when assessing a producer that relies heavily on one chain. Read your supply agreement carefully before borrowing against it, particularly any clauses about promotional funding, deductions and delisting. Our page on funding a large order explains how lenders treat purchase orders from big customers.
Documents to prepare
- Accounts, tax returns and BAS for the past two years, with figures for the year so far
- Business bank statements for at least the most recent six months
- Aged debtors list and sales by customer and channel
- Food safety certificates, your latest audits and any licence held with a state regulator
- Retailer supply agreements or purchase orders you want to fund
- Equipment quotes, including installation and commissioning
- Your recall plan and insurance details
Example: a sauce producer winning a national ranging
A hypothetical example. A family-run sauce and condiment producer in south-east Queensland has supplied independent grocers and delis for six years, turning over about $1.8m. It’s offered a national ranging with a major chain for three products, starting in four months. To meet the volume, it needs a second filling and capping line (about $210k), a packaging run of printed labels and jars (about $90k) and ingredients and labour for the first two production runs (about $160k) before the chain’s first payment.
The bank offers to finance the filling line but not the working capital. The owners place the line on equipment finance, use a short-term loan for the packaging run, and set up an invoice finance facility that starts once deliveries begin. Their accountant confirms the GST treatment of each product, and the owners switch to monthly BAS so any refunds on the new packaging and equipment come back sooner. With the second line in place, the chain becomes one large customer among about 200 smaller ones rather than the whole business.
For more on related trades, see our pages on bakeries and general manufacturers, or estimate facility costs with the invoice finance calculator.
Let’s look at what your kitchen or plant needs
Every food producer’s mix is different: a new production line, a packaging run, a big order or a factory of your own. The right answer usually combines two or three facilities, each matched to what it funds.
Sending an enquiry takes around a minute, and it isn’t recorded against your credit file. We keep your information in-house instead of scattering it across the market. One of our team studies your products, customers and plans, then rings for a conversation. Careful answers on turnover and purpose make our opening suggestion far more useful.
Frequently asked questions
Can I get a loan to fund my first supermarket order?
Yes, and it's one of the most common requests. Lenders will want the purchase order or ranging agreement, your production costings and the chain's payment terms. A line of credit, trade finance or short-term loan often covers ingredients and packaging, then invoice finance can bridge the wait for payment.
Will a lender take my stock as security?
Rarely for perishable goods. Long-life items such as canned, frozen or dry products are sometimes considered, but at a conservative value. Most food producers secure loans against equipment, debtors or property instead.
Why does my BAS keep showing a refund?
If most of what you sell is GST-free basic food, you collect little or no GST on sales but still pay it on packaging, equipment, energy and services, so you claim the difference back. Lodging monthly can speed up those refunds and ease cash flow. Your accountant can confirm which of your products are GST-free.
Do lenders care about food safety audits?
Very much. Certification such as HACCP-based programs, retailer audits and any state food authority licence show the business can keep its customers. A failed audit or recent recall doesn't rule you out, but you'll need to explain what changed.
My bank said no to finance for a new line. What now?
Banks often decline when the business is young, the equipment is specialised or the main customer is a single chain. Non-bank equipment lenders, invoice financiers and property-secured lenders each look at different strengths, so a decline from one bank isn't the end of it.