Manufacturers Need Personal Loans In Order to Grow
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UPDATED: May 7, 2012
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The American manufacturing industry has begun a steady rise again, but manufacturing owners are saying they need personal loans in order to keep up with their growth.
In a recent survey conducted by MFG.com, an online directory that matches businesses with manufacturers, 26 percent of small to mid-sized manufacturers said that “lack of capital to grow” is the biggest challenge they’re currently facing. The survey found that banks’ unwillingness to lend personal loans to manufacturers that need new equipment, marketing tactics, and capital to hire new employees is seriously stunting the potential of this industry.
The reason behind lenders’ apprehension to granting manufacturers the financing they need is due to the nature of the industry itself.
According to CNN Money, manufacturing work picks up during times of economic prosperity, but projects can plummet whenever there’s a small dip—which makes banks apprehensive to lend personal business loans out to this industry.
Matt Henderson, president of Performance Machine & Manufacturing is experiencing the plight of being unable to get financing. Despite the fact that his business is doing extremely well right now, he’s forced to work his 30-person staff seven days a week in order to meet demand.
He’s unable to hire more employees because he’s shelling out money to pay his current ones overtime just to keep up with his incoming projects. And major banks continue to deny his personal loan applications that he desperately needs in order to expand his business.
“If I get the loan, I can hire three full-time and two-part time workers and buy new equipment,” he told CNN Money. “I also want to do a heavy marketing campaign to bring in more business.”
Bank of America, one of the banks that denied Henderson’s loan application, says that despite the perceived trends, they are trying to issue personal loans to manufacturers.
“We’ve also hired more than 800 small business bankers to work with companies and assess their credit needs,” said Don Vecchiarello, a Bank America spokesman. “We want to make every good loan we can, because we also make a profit off these loans.”
Mitch Free, the CEO of MFG.com, reiterated the importance of business financing to CNN Money, saying “When funding is tight, you go into preservation mode, you restrict appetite for expansion and this hurts the economy. We all feel it.”