Fund FY27 From the Factory Equity You Already Hold
Manufacturer FY27 Equity First Funding | Switchboard Finance
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Equity First · FY27 Funding · Manufacturing
Fund FY27 From the Factory Equity You Already Hold
Going into FY27, the instinct is to line up new debt for the year ahead. The manufacturers who fund best do the opposite: they release the equity already sitting in the factory, deploy it, and borrow only for what is left. Here is the order that keeps your facilities from overlapping.
Quick Answer
The strongest manufacturers fund from the balance sheet they already hold before they take on new debt. The order matters: release equity, deploy it, then borrow only for what is left. Our manufacturing hub maps where each facility fits.
Start With the Equity You Already Hold
The first move in an FY27 funding plan is to fund from the balance sheet you already hold before you reach for new debt. After a few years of paying down the first mortgage and watching industrial property hold its value, most established manufacturers are carrying real equity in the factory that is doing nothing. Releasing that gap is almost always cheaper than borrowing fresh, because the security already exists and the lender is sitting behind an asset it understands.
That is the whole idea behind equity first, debt second. You free the equity, put it to work across the year's plan, and only then size any new borrowing around what is genuinely left to fund. The manufacturers I work with most closely tend to map the whole year before they sign anything, rather than reaching for a separate loan every time a cost lands. With a run of changes flagged for businesses from 1 July 2026, including a permanent instant asset write off and a reintroduced loss carry back announced in the 2026-27 Federal Budget and not yet law, FY27 rewards planning the order in advance instead of funding each purchase on its own.
Which Lever Comes First?
The lever you pull first depends on what your balance sheet looks like, not on what you want to buy. Pick the situation that fits and the order tends to follow.
Select your situation
Release the equity behind the bank first
If the factory is worth more than the first mortgage still owing on it, a second mortgage can free that gap as working capital without disturbing the bank facility underneath. You deploy the released equity into the year's capex, then size any new borrowing around what is left.
Equity releaseAcross all three paths the principle holds the same: a second mortgage releases equity, a chattel mortgage carries the plant, and private lending covers only timing. Where this lands for you comes down to how much equity sits in the factory and how quickly the money is needed.
Release, Deploy, Then Borrow
The sequence runs in one direction: release the equity, deploy it into the year's capex, then borrow only for the gap that is left. Run it the other way, taking new debt first and leaving the equity untouched, and you end up paying for capital you already owned. The released funds become genuine working capital, which can sit across wages, stock and deposits rather than being locked to a single purchase.
In practice the split is simple: the equity covers working capital, asset finance carries the plant, and a bridge covers only timing. Getting the capex versus equity split right early is what stops the year turning into a string of separate applications. A chattel mortgage on a new line, for instance, can be arranged once you know how much of the capex the released equity has already absorbed.
Keep the Facilities From Overlapping
Facilities stay cheap and clean when they do not overlap, each one secured against a different asset and doing a single job. A second mortgage sits against the factory, a chattel mortgage sits against the plant, and a short bridge sits against equity only for as long as a deadline demands. Build them as non-overlapping facilities and no single lender has to stretch its security to cover something that is really another facility's job.
The real advantage of mapping the finance first is that one broker can carry the whole stack, so the pieces hand off cleanly instead of stalling between lenders. When the factory itself needs to grow, the choice between a top up and fresh development funding is its own decision; we walk through it in factory extension finance versus a loan top up. Your own home loan can sit to one side of all of it, assessed on your self employed income rather than the year's capex.
Going into FY27, the manufacturers who fund best treat new debt as the last lever, not the first. Releasing factory equity frees working capital from the balance sheet you already hold, asset finance carries any new plant on its own security, and a short bridge covers only a genuine timing gap. Matched in that order, the facilities never compete for the same security and the year stops being a scramble between lenders.
Key takeaway: Release the equity you already hold, deploy it, then borrow only for what is left.Frequently Asked Questions
Using equity or debt to fund growth is not an either or choice; the order is what matters. The stronger FY27 approach is to release the equity you already hold in the factory first, deploy it into the year's capex, then borrow only for the gap that is left. That keeps new debt smaller and the facilities from competing for the same security.
A manufacturer can release equity from the factory with a second mortgage that sits behind the existing bank loan, freeing the gap between the property's value and the first mortgage owing on it as working capital. It does not disturb the bank facility underneath and is assessed with first mortgagee consent. You can read how this works on our second mortgage page.
The cleanest way to finance new manufacturing equipment is usually a chattel mortgage, which holds the asset itself as security and shapes the repayment to the cashflow that plant produces. Terms typically run 3 to 5 years, indicative and varying by lender, and a balloon can lower the monthly cost. See our chattel mortgage page for the structure.
A manufacturer can use private lending for working capital, but it is best treated as a short bridge rather than a year-long facility. Private lending funds quickly against property equity, so it suits a genuine timing gap while a cheaper bank or asset facility is arranged behind it. The exit should be planned before you draw, as covered in our working capital glossary entry.
For FY27 a manufacturer should arrange the equity release first, because it is the cheapest capital on the balance sheet and sets the size of everything that follows. Deploy that into the year's plan, add asset finance for any specific plant, and hold a bridge in reserve only for timing. For a worked example of weighing a top up against fresh development funding, see our guide on manufacturing equipment finance.
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