How Thomas Financed $400K in Equipment, Preserved Cash Reserves, and Expanded Production by 65%
A precision machining company owner discovers that the key to growth isn't choosing between equipment and cash reserves—it's building a system that provides both.
Illustrative Example: Names and specific details have been changed to protect client privacy. This case study represents a composite scenario based on real client outcomes and is provided for educational purposes only.
The Situation
Thomas runs a precision machining company in Ohio's industrial corridor, serving aerospace and automotive clients with tight-tolerance parts. With $2.5M in annual revenue and a reputation for quality, his business was poised for growth—if he could expand capacity.
The opportunity: a major aerospace client wanted to increase orders by 80%, but Thomas's current equipment couldn't handle the volume. He needed a new 5-axis CNC machine—roughly $400,000 installed and ready to produce.
The dilemma: Thomas had about $350,000 in cash reserves. He could pay cash for the machine but deplete his safety net. Or he could take a bank loan, keep his reserves, but pay 8% interest and tie up borrowing capacity he might need later.
The Manufacturing Owner's Dilemma
Option A: Pay Cash
Deplete Reserves
- ✓No interest payments
Equipment owned outright
- ✗Cash reserves depleted
Only ~$0 emergency fund
- ✗Lost opportunity cost
~$85,000 over 5 years if invested
Option B: Bank Loan
Traditional Financing
- ✓Cash reserves preserved
Keep emergency fund intact
- ✗8% interest on $400K
~$87,000 in interest over 5 years
- ✗Uses borrowing capacity
Less flexibility for future needs
Thomas felt stuck. Both options required significant sacrifice. And a third option— leasing—meant even higher effective interest rates with no ownership at the end.
The IBC Solution: A Third Path
A fellow business owner in Thomas's manufacturing network introduced him to the Infinite Banking Concept. The more Thomas learned, the more he saw a solution that didn't require choosing between equipment and reserves.
Thomas's Policy Design
Thomas committed $60,000 annually to building his family banking system—roughly what he'd pay in principal and interest on a traditional loan. But instead of that money disappearing to a bank, it was building an asset he controlled.
“I realized I was looking at this wrong. The question wasn't 'how do I pay for this machine?' It was 'how do I build a system that funds equipment purchases permanently?' That shift in thinking changed everything.”
— Thomas, Manufacturing Owner
The Implementation Strategy
Thomas couldn't wait 5 years to buy equipment. He needed the machine now to capture the aerospace contract. So he implemented a hybrid strategy:
Hybrid Financing Strategy
Began $60,000/year policy immediately. Year 1 cash value: ~$39,000.
Took $320,000 bank loan for equipment (not full $400K). Kept $80K in cash reserves.
As cash value grew, took policy loans to pay down bank loan faster.
By year 3, bank loan paid off. Future equipment financed entirely through policy.
The Results: Year by Year
Year One: Foundation + Equipment
CNC machine installed and producing. Aerospace contract secured. Bank loan of $320K at 8%. Policy premium started at $60K/year. Cash value reached $39,000. Cash reserves maintained at $80K.
Year Two: Aggressive Paydown
Policy cash value exceeded $100,000. Took $80,000 policy loan and applied to bank loan principal. Bank balance reduced to $180,000. Increased production generated extra cash flow for faster payments.
Year Three: Bank Loan Gone
Policy cash value exceeded $170,000. Took additional policy loan to pay off remaining bank balance. Total bank interest paid: ~$38,000 (vs. $87,000 projected). Savings: $49,000.
Year Four: Second Machine, No Bank
Cash value exceeded $250,000. Added second shift. Purchased second CNC machine ($280,000) entirely through policy loan. No bank involvement. Production capacity increased 65% from Year 1 baseline.
4-Year Summary: Thomas's Equipment System
The Math That Changed Everything
5-Year Comparison
| Metric | Pay Cash | Bank Loan | IBC Hybrid |
|---|---|---|---|
| Cash Reserves | $0 | $350K | $350K + CV |
| Interest Paid to Banks | $0 | $87,000 | $38,000 |
| Policy Cash Value | $0 | $0 | $280,000+ |
| Death Benefit | $0 | $0 | $1.2M |
| Future Flexibility | Low | Medium | High |
The IBC hybrid approach didn't just save Thomas money—it built a permanent equipment financing system. Every future purchase can be funded through his policy, and each repayment strengthens the system.
“I used to dread equipment decisions. Now I look forward to them. Every piece of equipment I finance through my policy makes the system stronger. The next machine will be even easier to fund than the last.”
— Thomas
Key Lessons from Thomas's Story
Hybrid Strategies Work
You don't need to wait years to start benefiting from IBC. Thomas used a bridge strategy combining bank financing with policy loans, transitioning fully as his system matured.
Don't Sacrifice Reserves
Manufacturing businesses need cash reserves for unexpected equipment repairs, supply chain disruptions, and opportunity purchases. IBC lets you preserve that safety net while still accessing capital.
Build for the Future
Thomas isn't just funding today's equipment—he's building a system that will fund equipment for the next 30 years. Each purchase makes the system stronger.
Compounding Applies to Financing
When Thomas pays himself back, that money stays in his system and keeps growing. The interest he would have paid to banks is now building family wealth instead.
Facing an Equipment Decision?
There may be a better way than choosing between cash reserves and bank loans. Explore how IBC could work for your manufacturing business.
No pressure. No obligation. Just education.