Alternative Custom Financing Solutions for Smaller US Manufacturers
With the United States poised for a manufacturing comeback, find out how to get the financing your manufacturing business needs to grow and succeed.
Manufacturing is staging a comeback in the US, driven by new energy realities and technological developments that are transforming the sector. As The Wall Street Journal reported recently, businesses that have reduced production costs by offshoring are increasingly considering reshoring, as the wage gap between the US and offshoring destinations continues to narrow. By 2015, US manufacturing may be no more expensive than outsourcing to China.
Financing Challenges Faced by Smaller Manufacturers
Nonetheless, many small and lower middle market manufacturing companies in the US still find it difficult to secure the funding they need to capitalize on upcoming commercial growth opportunities. According to a report by the National Small Business Association, almost one-third of small businesses are without the capital they need. This is preventing these companies from growing their business or expanding operations (36%), financing increased sales (17%), and increasing inventory to meet demand (11%).
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 have been tightening commercial lending standards once again, as The Wall Street Journal reported last year.
However, many smaller businesses dont 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 can offer a viable and attractive alternative to traditional bank financing.
How US Capital Partners Can Help
Getting the right financing can make all the difference for a smaller 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 $5 million for a manufacturer of organic soy products, $2 million for a manufacturer of memory storage products, $6 million for a manufacturer of advanced laser technology, and $8 million for a medical artificial joint implant manufacturer and distributor.