| The good news: Most manufacturing companies | | | | challenging. As banks pull back more traditional |
| expect growth opportunities in the coming 12 | | | | commercial-and-industrial lending, they are no longer |
| months. According to the 2010 CFO Outlook, | | | | willing to lend even to small businesses with solid |
| published by Bank of America, 69% of manufacturing | | | | financials. Their security demands have also increased. |
| company CFOs are considering financing in 2010, up | | | | This has pushed some companies to distress. It is |
| significantly from last year. The top two reasons for | | | | preventing many others from taking advantage of |
| small business financing are working capital and capital | | | | commercial growth opportunities that lie ahead. |
| expenditures. | | | | Unsurprisingly, businesses are increasingly turning to |
| The bad news: Two years ago, getting six-figure | | | | suitable private banks and other alternative lenders |
| traditional financing for a smaller manufacturing | | | | for small businesses. According to Bank of America |
| business was fairly straightforward. Today, it remains | | | | Business Capital, 49% of manufacturing firms expect |
| about as difficult as when the financial crisis first | | | | to use asset-based lines of credit in 2010, up from |
| began to unfold. Banks are as reluctant as ever to | | | | 42% last year. This type of alternative financing, |
| finance small businesses, as they continue trying to | | | | once considered a last-resort option, is now regarded |
| limit their risk amid the economic turmoil. According to | | | | as a fundamental financing solution. Since alternative |
| the FDIC, the volume of bank loans dropped in 2009 | | | | lenders in this space generally focus on collateral |
| by $587.3 billion, or 7.5%, from 2008—the biggest | | | | rather than credit-worthiness, they are able to do |
| full-year decline since World War II. | | | | deals that more traditional lenders shy away from. |
| The result: Many small manufacturing companies are | | | | Getting the financing you need |
| either struggling to stay afloat or finding it difficult to | | | | When times are difficult, unlocking the inherent value |
| capitalize on upcoming commercial growth | | | | of your assets, especially intangible assets, is |
| opportunities. According to the 2009 Year-End | | | | attractive. Today, small business financing is |
| Economic Report published by the National Small | | | | affordable, offers flexible loan structures, and can |
| Business Association, 39% of small businesses report | | | | provide the borrowing power that cash-flow lending |
| they are unable to get adequate financing for their | | | | alone may no longer be able to supply. At US Capital |
| business. No doubt many of these are manufacturing | | | | Partners, for instance, businesses can borrow money |
| companies. | | | | using their liquid, current assets or their fixed assets |
| So where should smaller manufacturing companies go | | | | as collateral. Our small business loans are priced |
| to get the financing they need? The answer is to the | | | | competitively with cash-flow loans, and come with |
| most experienced and competitive private banks and | | | | fewer financial covenants. They can be used to |
| alternative lending groups for small businesses. | | | | secure working capital, but also to finance growth or |
| Alternative Financing Options: Unlocking the value of | | | | acquisitions. |
| your assets | | | | Getting the right financing can make all the difference |
| If you're a manufacturing company, there is simply no | | | | for a small manufacturing business. Earlier this year, |
| need to let your business be held hostage to the | | | | US Capital Partners arranged and co-loaned a $3.5 |
| ongoing credit crisis. This is because there is already a | | | | million senior secured credit facility for Consensus |
| well-developed market for alternative lending that can | | | | Orthopedics, a medical artificial joint implant |
| provide working capital for small businesses with | | | | manufacturer and distributor. The new credit facility |
| assets. Loans can be secured against cash flow, | | | | included a revolving line of credit for both domestic |
| accounts receivable, inventory, purchase orders, | | | | and international assets along with a growth capital |
| premises, machinery and equipment, and even the | | | | term loan to support the company's continued |
| intellectual property associated with a brand or | | | | domestic and international expansion. |
| patent. | | | | It is important that your small business lender is able |
| What many businesses don't realize is the extent to | | | | to provide you with service that matches your |
| which they can leverage their business assets to | | | | company's specific needs to appropriately priced |
| secure funding. Help for small business lending is not | | | | capital. It can also be helpful and cost-effective to |
| on the way: it's already here. Alternative financing | | | | work with a firm that not only arranges asset-based |
| options can help many businesses get the backing | | | | financing for small businesses, but is also able to offer |
| they need when the banks say "No." Best of all, this | | | | funding—especially in situations where they can |
| type of financing is now affordable. Loans from the | | | | provide additional sources of capital from their own |
| most competitive private banks and small business | | | | fund to "fill the gap" in your required capital. |
| lenders are priced at bank-like rates upwards, | | | | If your manufacturing company is struggling to stay |
| depending on the level of risk of the business being | | | | afloat or finding it difficult to capitalize on upcoming |
| financed. | | | | commercial growth opportunities, know that there is |
| Securing traditional financing through banks and other | | | | new and affordable financing available despite these |
| financial organizations has now become highly | | | | tough times for small business lending. |