Making Widgets or Making Jobs? There’s a Loan for That

If you were to go to SBA.gov and look up “manufacturing loans” one of the first things you’ll read is, “When seeking financing for your manufacturing business, take some time to research all of the opportunities available to you.”

In an effort to encourage manufacturing, local governments as well as the Small Business Administration, offer lots of varied and sometimes unexpected financing options. Like any small business owner, the first stop when looking for a small business loan is the local bank around the corner. And, in many cases, it’s a good choice, but even if you get turned down at the bank there are other options worth investigating.

1. The SBA Loan Guarantee Program: A great place to start, but there are also similar programs offered by the U.S. Department of Agriculture and other agencies that support small manufactures with funds for purchasing equipment, machinery, and even working capital. It pays to get specific with what you need the money for. If your manufacturing business has the potential to directly impact job creation within the community, your business might even qualify within the SBA’s CDC 504 loan program designed to provide growing businesses with long-term, fixed-rate financing for major assets like property and buildings. A CDC (Certified Development Company) can offer 100% guaranteed loans to small businesses in a position to help local economies create jobs.
2. Tax Exempt Bonds: These bonds are typically used to fund the purchase of equipment, fund working capital, and buy machinery. Like the CDC 504 loan program, if you can demonstrate that you will be able to create jobs with the proceeds of the loan, this could be a good option for  you.
3. Export Assistance Loans: If you’re small business is manufacturing products for export, the SBA offers more than one loan option. An Export Express loan is designed to streamline the process of obtaining a small business loan up to $500,000, an Export Working Capital loan is designed to do just that—provide working capital for exporters, and the SBA also offers International Trade loans designed for manufacturers who plan to start or continue exporting. Some of these loans can even be used to mitigate the impact of actions taken by importers. In that case, the proceeds from the loan must enable the borrower to be in a better competitive position.
4. Grants: Although federal and state governments don’t provide grants for manufacturing, there are programs where for-profit companies can apply for research grant funds. Click HERE to see if any apply to your business.
5. Venture/Equity Investors: If you’re manufacturing business has a product with the potential to reach a vast market and grow exponentially, you may be able to successfully court a venture firm or other equity investor. Although the government does not do any equity investing, the do offer services to help small business owners find potential equity investors.

Like any small business loan, the ability to secure a loan for your small manufacturing business will also rely on your credit score, annual revenues, collateral, and the ultimate purpose of the loan. Remember, job creation is a big motivator to finance a manufacturing company, so including projected job creation numbers in your pitch to the bank is something you don’t want to overlook.