With a high demand for labor, technology that needs to be upgraded to keep up with the competition, and materials that increase in cost on an ongoing basis, manufacturing businesses are often cash flow challenged. It’s important that you work with a lender that understands the unique challenges and opportunities in the industry, and offers lending solutions that are specifically designed for manufacturers. At Pursuit, we can provide you with a range of financing options to meet all your funding requirements, from short term refinance solutions to capital intensive finance sources.
When you have the drive and plans to reach your manufacturing goals, you want the right loan to match it. With manufacturing loans, you can make the purchases you need to improve your equipment and processes, secure projects that will put you ahead of the curve, or expand into new markets.
Manufacturing loans can be used to acquire the right equipment, purchase commercial property to house your operations, or simply cover operating expenses like payroll. They can also be used to hire and train a team of talented employees to ensure your manufacturing business stays competitive, or bid on and secure the projects you need to stay profitable.
Depending on the lender and type of manufacturing loan, some may require you to provide collateral. Others may have lower credit score requirements than you or your personal business credit scores, meaning that you can qualify for a loan with lower interest rates. However, if you are a riskier borrower, your credit could be impacted by missed payments, so it’s important to do all you can to maintain good business credit and qualify for better loan terms.
There are several different types of manufacturing business loans, including business term loans, invoice financing (factoring), and USDA guaranteed loans for rural manufacturers. A business term loan will typically provide you with a lump sum of capital, and can be repaid over the course of one to 10 years. It can be used to acquire new or used manufacturing equipment, or it can be used to pay for operational costs like payroll or insurance.
Invoice financing is another option for a manufacturer, and it works by selling your outstanding invoices to a lender in exchange for immediate cash. As the name suggests, it’s a great way to smooth out your cash flow and manage peaks and valleys in your revenue stream.
A final type of manufacturing business financing is known as Work In Progress (WIP) financing, and allows a manufacturer to fulfill orders with raw materials and labour costs paid upfront by the lender. When the order is completed and delivered to the customer, the manufacturer pays the lender back with a share of the gross profit from the sale. Regardless of which type of financing you choose, be sure to shop around for the best terms and rates, as many lenders offer special programs that may help you save money on your interest costs.