Your Small Manufacturing Business Loan: Prepare Well, Keep the Faith
By Taylor Sisk, Staples® Contributing Writer
Youve got a small manufacturing or maker/crafter business or, perhaps, a firm foundation on which to launch one and now its time to ask for a loan.
Your product is a good one; this business is your dream. So keep the faith and trust in yourself. Youre going to realize your potential. Heres how to get the small business loan you need.
Research Your Options
The three most common funding options are line of credit, business credit card and Small Business Administration loan. Learn what you can about each type and consider the best lenders for the job. Larson points out that services are available, including Staples Business Loans, that will match people with the right lenders. All you have to do is fill out a form.
Plot Your Future
Potential lenders want to see a bankable business plan, whether youre a traditional manufacturing operation or a maker/crafts business, according to Cheree Warrick of TheProfitPartner.com, a Fairfax, VAbased company that helps entrepreneurs write business plans.
She suggests your business plan address five critical areas:
1. Market opportunity. Build a strong case for the likelihood of your success. Carefully research the size and demographics of your intended market.
2. Your competition. Establish your place in the market. Describe what products are already being provided and what your business will bring thats missing.
3. Customer acquisition and retention. Describe how you plan to attract customers and ensure loyalty so its clear that you can grow and maintain a revenue stream.
4. Team building. Form a solid team at all levels of your business or youll never attain your funding and business goals. Lenders want a strong team that can take the venture all the way.
5. Financial forecasts. Demonstrate to the bank that the loan payments comfortably fit into your budget without breaking it.
Lets assume you have a small manufacturing business thats up and running and returning a modest profit. Now you want to secure a loan to expand your operations. Be prepared, Larson says, to specifically respond to what youll be using the loan for, how its going to increase revenues and what the state of your cash flow is.
He suggests highlighting job creation in your plan and your funding application, especially if you're going for an SBA loan. Show them exactly how your loan is going to help either create jobs or maintain your current workforce, he advises.
Small business owners should trust that there is definitely capital out there for them, even if their credit is less than perfect, says Stephen Sheinbaum, founder of Merchant Cash and Capital, an alternative lender based in New York that Staples Business Loans works with through its services provider, Lendio. You shouldnt feel as if you cant have a conversation with a lender just because your credit score isnt 850.
Whats more, the fact that youre in the manufacturing/maker business might give you a leg up on many others seeking small business loans. Certain aspects of your business make you more qualified for a higher-quality loan because:
Play up your assets, both material and intellectual, when seeking a manufacturing loan. Your confidence will pay dividends.
Stay in the Know
Stay apprised of developments in your area of manufacturing or craft and the broader economy, so you have a better sense of when its a good time to seek financing for taking the next step.
Beyond knowing your immediate competition, know your industry, advises Aga Merx, vice president and SBA manager for Proficio Bank, which specializes in small business financing in the Salt Lake City area. Show the lender that you research what youre up against, you monitor what's out there and youre always on top of your game with your business.
Adds Larson: Be involved with your industry. Subscribe to trade publications, go to conventions and network with people doing similar things.
When you see opportunities, he continues, start the business loan process right away so you have the capital when you need it.