Textile Business Loans
For centuries, textiles have been essential in shaping many industrial areas – so many other industries are directly dependent on the textile industry. Ancient civilizations, predominately India, Egypt, and China, developed the first forms of manufactured textiles through cotton, silk, and linen. While all of these manufactured textiles at the time consisted of basic clothing and draperies, this started the revolution into a major booming textile industry that altered mindsets among all classes. Over time, clothing, housing furnishings, and so much more became more elaborate, unique, and creative; this facilitated the transition of the Industrial Revolution in the textile industry in the United States.
Samuel Slater migrated to America shortly after the Revolutionary War. Slater managed to smuggle textile manufacturing secrets from England, leading to the first water powered yarn spinning mill in America. This amazing creation was the start of the Industrial Revolution for the textile industry in America, however over time, growing technological advances have continued to amplify this original creation. In modern society, it is easy to explore the various trends and fashion statements that were developed by the textile industry over the past 200 years, but the trends that are emerging today are literally being developed from ideas seen in popular, iconic science fiction movies like “Back to the Future”. The age of technology and nanotechnology is revolutionizing the textile industry from one that focuses solely on mass production of cheap clothing to companies creating innovative niche products that could change the way people utilize and value clothing and other products.
Textile Industry Statistics and Trends
The range of top of the line, innovative products being produced by the textile industry today is propelling the American society into a futuristic, technology dependent future. In the past few years, the textile industry has created clothing and other textile related items that have become essential to major military programs, police forces, Olympic swimmers and gymnasts, Major League Baseball teams, flying planes, developing high tech bicycles, and the average consumer. While this industry has had many ups and downs when it comes to capital, trade agreements, and employment issues, the transition of textile businesses into the technology sector is making the textile industry irreplaceable. Some of the major terms being coined for the new textile industry that is emerging consist of “smart clothing or garments”, “functional fabric”, “textile devices”, and other variations incorporating smart technology with textiles.
From 1995 to 2009, the textile industry suffered from massive closures that affected too many workers and communities. Thanks to the rebounding economy and amazing innovation in the textile industry, this industry is seeing new growth. In 2015, the textile industry across all sectors saw an increase in shipments, employment, and growing capital expenditures. There was an estimated $76 billion in shipments for the textile industry, equating to almost 14 percent increase since 2009. There was also a giant leap in employment; the textile industry now employs over 579,300 workers in a variety of different related sectors – textile mills, textile product mills, apparel, cotton farming, wool, and artificial and synthetic filaments and fibers. With the increasing innovation of the textile industry through the use of advanced technology, there is expected to be an even larger increase in employment in the upcoming years. Even though the textile industry was greatly affected by the economic recession, many textile businesses today are staying ahead of the game by focusing on niche ideas that incorporate endless amounts of technological possibilities. Some of the major developments being seen today by many textile businesses include:
- Safety: Many different structures, particularly ultra-lightweight and air pressurized air beam arch structures, are being created through specific niche textile companies who are specializing in a relatively new textile field. The evolution of the textile industry is paving the way to better architectural textiles that enhance key areas such as strength to weight ratio, light translucency, fabric UV resistance, flame retardancy, energy efficiency, and so much more.
- Outer Space: There are so many vital textile applications when it comes to exploring outer space. The collaborative work done by textile businesses and engineers are leading to improved safety and comfort for astronauts while in space; the creation of advanced clothing, such as pressurized gloves and the new creation of ”Space Cloth”, have helped greatly impacted NASA and astronauts. Textile businesses focusing on working with engineers are starting to produce unimaginable advances in the textile industry.
- Nanotechnology and the Internet of Things: Through innovative techniques being developed by all textile businesses today, consumers are seeing endless amounts of textile technologies that are transforming their lives – stain resistant carpets, wicking fabric clothing, bio-filters that filter out bacteria and hazardous particles, fibers that administer time-released medications, magnetic nanoparticles embedded in currency and documents, and even textiles for airplanes that can absorb a variety of airborne biohazards. The possibilities for innovative textile work are endless for textile businesses that are incorporating technology into their creations and productions. The Internet of Things is another major technological technique that many industries are incorporating into their businesses, and the textile industry is no different.
- Department of Defense and Academics: Interestingly, the United States government launched the New Revolutionary Fibers and Textiles Manufacturing Innovation Hub; this project consists of over 89 manufacturers, universities, and non-profits being spearheaded by the Massachusetts Institute of Technology (MIT) with the Department of Defense. This initiative is attempting to revive the United States textile industry by incorporating technology into every textile business. This transition will completely transform the textile industry, making this industry vital to daily living in America – and shifting the traditional textile industry into a high-tech industry. This initiative has already generated over $300 million in public-private investment and is expected to generate over 50,000 jobs within the next ten years in a variety of fields.
- Solar and Going Green: The growing need for more alternative resources has led to a variety of mind blowing, innovative concepts when it comes to the textile industry. Textile researches have finally started to develop a product that has taken years to achieve – fabrics that can be made into clothes that can simultaneously harvest energy from sunshine and motion. But wait! Not only is this development incredibly beneficial to our world, but scientists have also made this product affordable to everyone (when it does eventually go into mass production). This creation could lead to more efficient energy powering systems for day to day use; or for the average cell phone obsessed consumer, it could lead to being able to charge a cell phone by simply putting it in your pocket.
- Niche Ideas Essential to Growing Your Textile Business: All in all, the most essential ways to growing any textile business in this growing industry is to be creative, innovative, incorporating technology into everything, and focusing on a niche area (as opposed to producing a little bit of everything). As any textile business owner can see, the age of technology is completely revolutionizing the textile manufacturing industry, so to stay ahead in this highly competitive industry, textile businesses need to be transitioning out of antiquated methods of producing textiles. Making this transition can be incredibly difficult and expensive, so reviewing the variety of financing options below can help any textile business owner.
Types of Textile Manufacturing Loans
| Types | Rates | Terms | Funding |
|---|---|---|---|
| Bank | 6-10% | 3-7 years | 14-30 days |
| SBA | 6-10% | 3-7 years | 10-30 days |
| Line of Credit | 5-15% | 1 – 3 years | 7-30 days |
| Alternative | 6-25% | 1-5 years | 5-7 days |
| Cash Advance | 1.16-1.55 | 3-24 months | 1-3 days |
| Invoice Finance | 1-2% weekly | 1 – 90 days | 1-3 days |
Textile Conventional Bank Loans
Every textile business in need of financing would prefer a bank term loan or line of credit. The issue is often being able to secure conventional financing. To qualify for a traditional textile industry bank loan the manufacture must have good cash-flow, revenue, profitability and collateral — not to mention good credit. If a textile manufactur is able to provide documentation proving this, they will have access to the best rates and terms of any commercial financing
- Rates: 5-10%
- Terms: 1-25 years
Textile Company SBA Loans
Its not easy for a textile manufacturer to obtain conventional financing. If you’ve tried but were unable to get a bank loan for your company, the next best option would be to seek SBA financing. SBA loans provide textile manufacturers with access to traditional financing through the use of a SBA enhancement. The Small Business Administration uses the guarantee to cover a large portion of the lender’s losses should the textile company default on their loan. By providing this enhancement the hope is to encourage the SBA lenders to provide financing to textile manufacturers who wouldn’t receive a bank loan without it.
- Rates: 6-8%
- Terms: 7-25 years
Alternative Textile Business Loans
Alternative loans are the mid-point between bank loans and high-interest cash advances. The beauty of alternative lending is the ease with which funds can be obtained due to relaxed credit and profitability criteria. But, with the increase access to funding comes higher rates due to the alternative lenders being exposed to more risk. Alternative Business loans for textile companies are used for a number of uses, including working capital, paying employee payroll and staff expenses, expanding your business, marketing your company, refinancing high interest debt, etc..
- Rates: 9-16%
- Terms: 1-5 years
Asset Based Textile Financing
There are a number of assets a business may have at their expense that they may use to help secure business financing. Some of these assets include commercial real estate, inventory and equipment, along with other assets like accounts receivable. Another asset that can be used as collateral for business financing is the owner’s personal real estate or land (even if it has a 1st or 2nd mortgage). Asset based financing can come in the form of loans or lines-of-credit depending on the collateral and business revenue.
- Rates: 8-25%
- Terms: 6 months – 3 years
Textile Equipment Finance
Creating and manufacturing textiles requires equipment — often very expensive equipment. Rather than pay the full cost of the equipment upfront, a textile company may choose to either obtain a loan to purchase the equipment, or opt for a lender to purchase the equipment for the textile company, and then lease the equipment to the manufacturer for a period of time.
- Rates: 6-20%
- Terms: 1-10 years
Textile Industry Cash Advances
So if a textile manufacturing company has tried all the more conventional and alternative funding routes, but still weren’t able to obtain financing (maybe due to bad credit or insufficient collateral and cash-flow) an option may be to obtain a merchant or business cash advance. A merchant cash advance is the sale of a textile company’s credit card processing transactions for upfront financing, whereas an ACH business loan is the sale of a company’s future bank statement deposits in exchance for financing.
- Factor Rates: 1.16-1.50%
- Terms: 4 months – 2 years
