Financing Challenges and Opportunities for Today’s Smaller Manufacturers
With access to traditional bank financing still limited for many smaller businesses, US Capital Partners offers attractive alternative financing options for today’s manufacturing companies.
Manufacturers in the United States are re-establishing their competitiveness globally after a decade-long slide. The Bureau of Labor Statistics reported last month that productivity—or output per hour—in the manufacturing sector has increased by 2.2% over the past year alone. The sector is showing signs that it could add as many as 5 million jobs by 2020.
According to Forbes, buyers of manufactured goods are now taking to “on-shoring” to offset ancillary costs in the face of the global economic downturn, volatile fuel and transportation markets, and quality issues. This presents tremendous opportunities for US manufacturers.
Financing Challenges Faced by Smaller Manufacturers
Nonetheless, many smaller US manufacturing companies find it difficult to secure the funding they need to capitalize on upcoming commercial growth opportunities. According to a recent survey by the National Small Business Association, just two-thirds of small businesses (65%) are able to obtain adequate financing, down from 73% six months ago. As a result, these companies find themselves unable to grow their business or expand operations (36%), maintain their staff levels (20%), finance increased sales (18%), or increase inventory to meet demand (10%).
Unlocking the Value of Your Assets
Traditional banks rely primarily on credit worthiness to determine whether, how much, and at what cost to lend to a business. Unfortunately, the application-to-loan ratio is low. With mounting pressure from regulators, banks are tightening commercial lending standards once again, as The Wall Street Journal reported earlier this year.
However, many smaller businesses don’t appreciate the sheer extent to which they can leverage their business assets to secure the funding they need. Called asset-based lending (or “ABL”), this type of financing is affordable and offers flexible loan structures. Loans come with fewer financial covenants than bank loans, and close more quickly than most other financing methods. ABL lenders focus on collateral rather than credit-worthiness, and therefore offer an alternative when the bank says “no.”
How US Capital Partners Can Help
Getting the right financing can make all the difference for a small manufacturing business. At US Capital Partners , manufacturers can borrow money using their liquid, current assets or their fixed assets as collateral. Loans can be used to secure working capital, but also to finance growth, acquisitions, or capital expenditure.
Recently, for instance, US Capital Partners provided financing of $6 million for a manufacturer of advanced laser technology, $1.5 million for a manufacturer of energy-saving LED lighting products, $2 million for a pharmaceutical compound manufacturer, and $8 million for a medical artificial joint implant manufacturer and distributor.