New federal funding opportunities open up for manufacturers
- New or proposed federal funding for apprenticeships, including a program that pays manufacturers $3,500 to hire someone as an apprentice, can help manufacturing businesses to mitigate labor shortages and high costs.
- SBA MARC loans are another new program that can offer a cash injection of up to $5 million for small manufacturing businesses, although loan funds can only be used as working capital.
- Find an advisor to help you understand the current landscape of federal funding, incentives and loans available for manufacturing businesses and decide which fits your specific needs.
This is a challenging era for manufacturers, as businesses continue to navigate tariffs, rising costs and uncertainty. But two new federal funding opportunities offer a measure of support to help manufacturers adapt to today’s business climate.
The Department of Labor (DoL) has announced new or proposed apprenticeship funding that manufacturers can use to help cover the cost of offering apprenticeships. Meanwhile, the Small Business Association (SBA) has also announced the approval of the first round of Manufacturers’ Access to Revolving Credit (MARC) loans, a potential flexible capital source for manufacturing businesses.
Keep reading to learn more about potential cost-saving ideas and opportunities available to the manufacturing industry.
What apprenticeship funding opportunities are available to manufacturers?
Manufacturing has struggled with both labor shortages and high labor costs for years. Apprenticeship funding can help mitigate both by paying manufacturing businesses to offer apprenticeships and develop new workers.
The DoL recently announced or proposed several apprenticeship funding opportunities that can help manufacturers make apprenticeships more cost-effective or create new training opportunities. These include:
- American Manufacturing Apprenticeship Incentive Fund: This new program pays employers $3,500 for each new apprentice hired and registered. The current fund of $35.8 million, which is administered by the Arkansas Department of Commerce, is now available to manufacturers who complete an application process and meet program requirements.
- YouthBuild pre-apprenticeships: The DoL has announced $98 million in new funding for YouthBuild, an existing program designed to support community pre-apprenticeships for young people aged 16-24 who are unemployed or not in school. YouthBuild programs help participants earn a high school diploma and offer construction training, as well as training opportunities in targeted sectors like advanced manufacturing.
- Pay-for-Performance Incentive Payments Program: A recently proposed program with a projected $145 million funding pot, this incentive is designed to encourage companies to hire apprentices in specific sectors like critical infrastructure buildout, shipbuilding and defense industrial base, as well as healthcare, IT and telecommunications. This funding is not available at this time, but is something to watch for moving forward.
Depending on what your business needs, consider applying for apprenticeship funding or exploring a partnership with a local YouthBuild program to help more young people learn manufacturing skills.
What is the SBA MARC loan program?
The SBA’s MARC loan program is a new variant on SBA 7(a) loans aimed specifically at supporting small manufacturing businesses. The loans are meant to give manufacturers access to additional working capital to overcome cash flow challenges, refinance short-term debt or fund operations.
What are the basic terms of a MARC loan?
Manufacturers can apply for MARC loans of up to $5 million. To qualify, your business must have an NCAIS code of between 31 and 33. Your net operating income must also be at least equal to your total amount of debt.
- Loans are issued by banks, credit unions or other lenders, but are backed by the SBA at 85% for loans up to $150,000 and 75% for loans above $150,000.
- You can apply for either a 10-year term loan or a 20-year line of credit (10 years revolving followed by a 10-year term loan).
- Your business must both meet standard SBA loan qualifications and be approved by a lender in order to receive a loan disbursement.
- You will also need to pay fees, and your lender will place a lien on your business assets.
MARC loans can only be used for working capital
One critical element to know here: Under SBA rules, MARC loans can only be used to bolster your access to working capital.
That means that you can’t invest loan funds in buying equipment or expanding your physical manufacturing capabilities, for example. You can only use MARC money for meeting day-to-day expenses, buying materials, paying off short-term debt or other typical working capital expenditures.
What are your next steps?
Funding opportunities like apprenticeship dollars and MARC loans can help manufacturers navigate today’s complex business environment and adapt to overcome challenges. So how should you take action here?
1. Find an advisor
Find an advisory firm that specializes in the manufacturing sector to help you understand the current funding and incentive landscape that may be available to your business. This may include not just federal loans and program funds, but also tax incentives like qualified production property that can help boost your profitability.
2. Determine eligibility for relevant programs, loans and incentives
Identify the eligibility requirements for each of the loan options by visiting the websites noted in the section above. Each loan has specific eligibility requirements that can be found on the site homepage or in the FAQs section. Your company’s CFO and/or head of HR will likely need to help determine eligibility.
If you run into any challenges determining eligibility, your advisory firm can help you navigate these.
3. Apply for the appropriate programs
After determining eligibility, apply for the programs through the appropriate site. Typically, the SBA or the DoL, through the Arkansas Department of Commerce, should be able to answer questions you may have throughout the application process.
4. Continue to monitor available incentives in light of your business needs
Many of these programs and incentives are ongoing. If participating in an apprenticeship program doesn’t make sense today, keep it in mind for tomorrow and keep an open dialogue with your advisory firm on how various federal incentives can fit into your business goals.
How Wipfli can help
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