SBA 7(a) Loans for Manufacturers
In the United States, the manufacturing industry employs more than 12 million people— and produces nearly 20% of all the world’s goods. If you own and operate a manufacturing company, and you want funds to expand your firm, build a new headquarters, acquire a competitor, or even refinance your business’s debt, an SBA loan like the SBA 7(a) loan could be a fantastic option.
SBA 7(a) Loans and the Manufacturing Industry
While the SBA 7(a) program may be great choice for many manufacturing firms, they may not necessarily be easy to get. First, it’s important to make sure that your firm is within the SBA’s size limits for your specific sub-industry (in most cases, it will be, since the maximum size for a “small” business is actually pretty big.) For example:
Breakfast Cereal Manufacturing: Maximum 1000 employees
Cheese Manufacturing: Maximum 1,250 employees
Knit Fabric Mills: Maximum 500 employees
Cut and Sew Apparel: Maximum 750 employees
Petrochemical Manufacturing: Maximum 1,000 employees
Heating Equipment: Maximum 500 employees
SBA 7(a) Loan Uses for Manufacturing Businesses
When it comes to manufacturing firms, the SBA 7(a) loan can be used for a variety of purposes, including:
Buying out a competitor: If you’d like to acquire a competitor’s business, you may be able to use a SBA 7(a) loan to do so. These loans can also be used to buy out business partners or, in some cases, passive investors in a business.
Buying or building a new manufacturing facility: SBA 7(a) loans provide terms of up to 25 years for commercial real estate loans, and can also be used to finance all aspects of the construction process.
Buying manufacturing equipment: SBA 7(a) loans can be used to finance the purchase of heavy equipment, usually with up to 10-year terms.
Debt refinancing: If you want to refinance business debt, you can also do so with an SBA 7(a) loan. In most cases, however, the debt must currently have unreasonable terms, and must have been used to fund business purchases (not personal expenses.)
Working capital: Whether it’s B2B or B2C marketing, paying employee salaries during a rough patch, or simply keeping the office stocked with new supplies, an SBA 7(a) loan can provide the short-term capital that a manufacturing business needs. However, businesses looking for a revolving line of credit, especially those that face cyclical/seasonal sales cycles, may be better served by the SBA CAPlines program.