Best Manufacturing Business Loans Explained
In this section, we will explain what you can expect to receive when you obtain a loan. You’ll also see why we recommended each of the lenders we presented.
Approved lenders grant Small Business Administration (SBA) loans to small businesses to help boost the economy. The government endorses up to 85% of the total loan amount, giving breathing room so that you can focus on starting your company. However, there are massive penalties if you fail to repay.
These loans are ideal for obtaining the capital needed to start your manufacturing company. This type of loan can cover purchasing or development expenses, while you can also use it for operating funds during the first few years. What makes it suitable for new businesses is that you’ll receive education on planning and on how to spend the funds wisely.
Funding Circle is an approved SBA lender, providing discounts to businesses run by women and minorities. It has received positive reviews for its processes and standards, being praised by several new owners in the industry. You’ll have a dedicated manager for your account to help you manage the funds effectively too.
Equipment financing helps you purchase or lease the machinery and tools you need to operate your business. The most outstanding feature is that you’ll receive up to the total amount you require as long as you can justify the costs. Since it’s like a secured loan, you don’t need to worry if you have a poor credit rating.
Your machinery and equipment are the lifeblood of your manufacturing business. You will need everything to run smoothly with the latest technology. If you don’t manage to get approved for an SBA loan, equipment financing is the next best option.
SmartBiz specializes in SBA loans in the construction industry, but it also offers equipment financing as an alternative financing source. It doesn’t merely give you one option, but it also proposes several business models for your manufacturing company based on your objectives. It has a high loan approval rate with few requirements.
When it comes to covering expenses like payroll, maintenance, and daily operations, a business line of credit can be highly beneficial. The lender offers you a credit limit, but you only draw what you need when you need it. Furthermore, you’ll only pay interest on what you owe.
You can purchase raw materials for your manufacturing business when you’re in short supply with a business line of credit. When you receive income from sales, it’s easy to pay the borrowed amount back. Fortunately, you won’t activate any early payment fees, and the amount you owe spreads over the initial repayment period.
Fundbox is our recommended lender for its business line of credit for the manufacturing industry. You don’t need any collateral to receive funds, and there are no extra hidden fees. Most clients are impressed with its high approval rate.
A merchant cash advance is the best solution for businesses that deal with bank card payments. The lender gives you a lump sum that you can use for your daily operations and takes a percentage of the sales performed on your card machines. There’s generally a monthly minimum income limit you will need to meet, otherwise, you’ll need to pay the total amount owed.
Most of your clients will probably pay for your manufacturing services online or through bank transfers, making a merchant cash advance a suitable funding choice. Once more, if you have a sufficient monthly turnover, you’ll pay your loan off in no time.
Square Capital offers merchant cash advance financing to members registered for its services. If you have a new business, you simply need to register using their quick application process. You’ll receive card machines linked to your loan account.
Invoice financing helps you get funds based on purchases, in cases where you are owed payments. This loan type is useful when you are entering into contracts with special payment clauses, which may force you to wait between 30 and 45 days before receiving any money. Lenders buy these invoices from you in lieu of future payment, taking a small percentage as a fee.
You might start finding a clientele for your manufactured products that are only willing to pay after an extended period. Unfortunately, you have bills and employees to pay. Invoice factoring helps you cover these expenses until the clients pay their outstanding bills.
BlueVine is our lender of choice for invoice factoring. BlueVine boasts transparent fees, funding only for what you need, and larger credit limits.
Manufacturing businesses have many expenses and sometimes they can get the better of even a brilliant business plan. Getting short-term loans allows companies to stay afloat even when finances are a bit tight.
Short-term loans offered by Fora Financial are quick and easy to apply for through an online portal. Approval can be reached within 24 hours and the funds, which can be up to $500,000, will be paid into the business’ bank account within only three days.
Such loans will allow a manufacturing business to pay for the maintenance of equipment, payment of taxes and supplies, and more. Fora Financial does not dictate what a business does with its funds. Getting approved is easy as well, with only basic requirements that must be met, such as the company being operational for at least six months.