Four Reasons Why Manufacturing Automation Benefits Small Businesses
If you are a small manufacturer, you are aware of the rising levels of automation in production processes. You have probably thought about automation for yourself. There are good reasons to add automation to your manufacturing process, and financing for it can be highly accessible with a 504 loan from the Small Business Administration (SBA).
Automation Is Good for Manufacturing Businesses
The spread of new automation technologies can be seen throughout the manufacturing sector. There can be little doubt that this trend will continue. You could say that it is a continuation of a process set in motion by Henry Ford when he devised the first assembly line. It is only natural for businesses to use the best means available to meet their needs. Here are just some of the benefits of automation:
- Automation creates a faster, cleaner, safer process
Manufacturing automation can improve production processes. Machines work ceaselessly and efficiently. They can do things people cannot, or simplify processes that would otherwise require intensive human labor. Machines do what they are programmed to do without variation, which means they don’t make mistakes. This creates a more profitable factory and better working conditions for its employees. It also gets your product out the door faster in a cleaner, safer way.
- Automation creates new capabilities
Modern automation is highly mobile and adaptable. A machine can often be programmed and even physically altered when necessary so that it fulfils a number of functions as needed. This makes it possible for a single manufacturing unit to make more diverse products without expensive and time-consuming refitting or the purchase of new equipment. In addition, with more and more design done in digital format, automation provides a faster, more convenient interface for machining than a human making mechanical adjustments.
- Automation creates entire new markets for you to fill
Consider the example of the 3D printer. It has made several aspects of the manufacturing process, such as the creation of prototypes and scaled models, easier. But that is just the tip of the iceberg. New applications for the device are being found practically daily, ranging from the manufacture of goods like costume jewelry and prosthetic limbs to the construction of houses. This creates new ample opportunities for its users. In addition, 3D printers are a whole new industry themselves. They are manufactured, sold, serviced and supplied, and the new products created with them require new wholesalers, marketers, distributors, salespeople and so on. That’s a lot of new jobs.
- Automation is the way of the future
Because of its advantages, the use of robotics is spreading rapidly. This increased demand is driving its price down, which in turn encourages it to spread further. Soon, automation will be the rule rather than the exception in manufacturing, and the lack of automation will be a serious disadvantage for facilities hoping to remain competitive.
Financing Manufacturing Automation with an SBA 504 Loan
A great way to begin your journey toward a more automated future is to take advantage of the SBA 504 loan, which can provide up to $5.5 million for equipment with a service life of ten years or longer. It can also be used to make upgrades to the building you own, or to buy land or buildings. The 504 loan has a fixed, below-market rate and a 10-, 20- or 25-year term. It is fully amortized, so there are no balloon payments.
A nonprofit Certified Development Company (CDC) such as TMC Financing administers the 504 loan. These loans are granted in conjunction with a conventional lender (a bank or credit union) that provides 50% of the total project cost. Your CDC facilitates the SBA loan for up to 40% of the cost, or $5.5 million for many manufacturing projects or if your project participates in the SBA’s Green Energy Program. (For other types of projects, the loan maximum is $5 million.) All you need to provide is 10-15% of the project cost as a down payment.
TMC Financing Client Success Story
TMC Financing has been helping small businesses gain automation capabilities for a long time. For example, Jessee Equipment Manufacturing was founded in Chico, CA by 1954 by Gene Jessee, who developed new equipment for processing almonds that revolutionized the almond industry. The Jessee company thrived, making even more technological advances in the following decades, expanding the applications of its technology and incorporating modern elements such as laser technology, automation and touchscreen control.
Today, Jessee creates customized in-plant designs. Its equipment processes a wide range of nuts and fruit. The company has satellite offices in Modesto, CA and southern Oregon. It has sales offices in Chile and China and is setting up an office in Queensland, Australia.
When Jeffrey McKay bought the Jessee company in 2014, he set up the Wholesome Nut Company and used a 504 loan from TMC to create this successful complementary business. Wholesome Nut receives, processes, sells and ships walnuts and almonds to more than 50 countries. It deals directly with farmers, offering them its own business model.
If you are excited about the future of manufacturing automation and ready for a more competitive, prosperous future, you can find out more the 504 loan from one of TMC Financing’s 504 loan experts. TMC is an SBA Premier Certified Lender, and has funded projects worth more than $9 billion across California and Nevada, resulting in the creation of an estimated 60,000 jobs. With over 35 years of experience, TMC can help you find the financing that is best for you and guide you through the 504 loan process. Contact TMC Financing today.
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