More Business Expansion Loans Expected as Manufacturing Sector Recovers

The manufacturing sector recovery is projected to continue throughout the remainder of 2012, spurred in part by expansions by major automakers in the U.S. Nissan recently announced it will add 1,000 new jobs in Mississippi in order to expand its production of compact sedans for the U.S. market. Chrysler is discussing the addition of a third shift to its operations in Michigan in order to meet demand for its Ram pickup trucks. The soaring yen has increased labor costs in Japan, prompting announcements from both Toyota and Honda that they will be expanding their manufacturing operations in the U.S. in the coming months as well. These business expansions are good news for the manufacturing sector, as added demand and production in the automotive industry typically precedes a general recovery in the economy as a whole.

Financing for the manufacturing sector

As a rule, smaller manufacturing firms do not have the financial resources available to corporations like Nissan, Chrysler, Toyota and Honda. In order to expand their operations, hire new staff and create new product lines, these companies must obtain funding from small business lenders. These lenders typically require significant collateral for business capital loans; industrial facilities and warehouses are most commonly used as collateral by manufacturing concerns. The properties in question may be wholly owned by the borrower; alternatively, secured business loans may be made against accrued equity in warehouses and other facilities not yet paid off.

The loan application process

In order to get the most from available collateral and obtain the funding they need to expand their manufacturing operations, small business owners should follow these simple guidelines.

• Maintain and organize complete records verifying ownership and current equity in the properties. Banks and lending institutions require these records to process business loan applications, so it's essential to keep these financial records up to date and as accurate as possible.
• An appraisal of the property's current worth may be required to determine the amount of the loan. Loan-to-value ratios tend to become more conservative as the overall money supply shrinks; as a result, many borrowers may require additional collateral in order to obtain the funding their business needs.
• Plan conservatively. While the recent economic news in the manufacturing sector has been largely positive, most lenders are remaining cautious and limiting their exposure to risk in the industrial segment of the economy. By maintaining and communicating realistic expectations of future profits and expansion plans, borrowers can reassure banks and other lending institutions of their ability to pay even if an unexpected economic downturn occurs.

Presenting an organized and professional image can make a favorable impression on lenders and improve the chances of funding for the business expansion loan.

CNF Exchange provides a unique venue that allows manufacturing companies to connect with business capital loan providers to create win-win financial scenarios for both parties. We can help you position your company favorably in the lending marketplace and provide you with the tools and advice you need to expand and grow your manufacturing business in today's recovering economy.

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