In Tough Times for Small Business Lending, 49% of Manufacturing Firms Will Use Alternative Financing Solutions in 2010
I recently blogged about how many small manufacturing companies are leveraging their business assets to secure financing - while others continue to struggling to stay afloat or are finding it difficult to capitalize on upcoming commercial growth opportunities. Securing traditional financing through banks and other financial organizations has now become highly challenging. As banks pull back more traditional commercial-and-industrial lending, they are no longer willing to lend even to small businesses with solid financials. Their security demands have also increased. This has pushed some companies to distress. It is preventing many others from taking advantage of commercial growth opportunities that lie ahead.
How Manufacturers Are Leveraging Their Business Assets to Secure Financing
Unsurprisingly, businesses are increasingly turning to suitable private banks and other alternative lenders. According to Bank of America Business Capital, 49% of manufacturing firms expect to use asset-based lines of credit in 2010, up from 42% last year. This type of alternative financing, once considered a last-resort, is now regarded as a fundamental financing solution.
Since alternative lenders in this space generally focus on collateral, rather than credit-worthiness, they are able to do deals that more traditional lenders shy away from. The Commercial Finance Association, an industry trade group, has reported that the asset-based lending market is now worth $590 billion. Loan volumes have been increasing by an average of 10% a year.
Getting the Financing You Need
When times are difficult, unlocking the inherent value of your assets, especially intangible assets, is attractive.
Today, small business financing is affordable, offers flexible loan structures, and can provide the borrowing power that cash-flow lending alone may no longer be able to supply. At US Capital Partners, for instance, businesses can borrow money using their liquid, current assets or their fixed assets as collateral. Our asset-based loans are priced competitively with cash-flow loans, and come with fewer financial covenants. They can be used to secure working capital, but also to finance growth or acquisitions.
Getting the right financing can make all the difference for a small manufacturing business. Earlier this year, US Capital Partners arranged and co-loaned a $3.5 million senior secured credit facility for Consensus Orthopedics, a medical artificial joint implant manufacturer and distributor. The new credit facility included a revolving line of credit for both domestic and international assets along with a growth capital term loan to support the company’s continued domestic and international expansion.
It is important that your small business lender is able to provide you with service that matches your company’s specific needs to appropriately priced capital. It can also be helpful and cost effective to work with a firm that not only arranges asset-based financing for small businesses, but is also able to offer funding – especially in situations where they can provide additional sources of capital from their own fund to “fill the gap” in your required capital.
If your manufacturing company is struggling to stay afloat or finding it difficult to capitalize on upcoming commercial growth opportunities, know that there is new financing available despite these tough times for small business lending.
To find out more about how your business can secure the funding it needs, visit http://www.uscapitalpartners.net or call (415) 882-7160.