What is SBA manufacturer financing? And how to qualify

The U.S. Small Business Administration (SBA) launched the Manufacturer's Access to Revolving Credit (MARC) Loan program, an SBA loan, to give small manufacturers dedicated access to working capital. 

The program targets the 98% of American manufacturers that qualify as small businesses, offering them flexible financing designed for their unique cash flow needs.

Manufacturing matters to the American economy, and it’s driven mainly by small businesses. According to the National Association of Manufacturers (NAM): 

• Small manufacturers represent nearly the entire manufacturing industry by count, and roughly 75% of these firms have fewer than twenty employees. 
• Every $1.00 spent in manufacturing generates $2.64 for the overall economy. 

The MARC program operates under the umbrella and guidelines of the already existing SBA 7(a) loan program. Learn how small businesses can access and leverage this specialized financing program. 

What is the new SBA financing for American manufacturers?

The 7(a) Manufacturer's Access to Revolving Credit (MARC) Loan Program provides working capital loans up to $5 million specifically for qualified small businesses engaged in manufacturing. The program sits within the SBA's existing 7(a) loan family but operates under rules tailored to manufacturers' needs.

MARC gives lenders flexibility to structure financing as either:

• Revolving lines of credit that manufacturers can draw on, pay down, and redraw during a 10-year revolving period, then convert to a fully amortizing term loan for up to another 10 years.
• Term loans with maturities up to 10 years, including the option for interest-only periods after initial disbursement.

This flexibility means manufacturers can match their financing to their business cycle. A company landing a large new contract can draw funds to buy inventory, then pay down the line as revenue comes in.

The program complements the SBA's core 7(a) and 504 programs. Your small business can combine MARC with other SBA or conventional loans (up to loan limits), giving you multiple tools to finance different aspects of your operation.

How to qualify for an SBA manufacturer loan

To qualify, your business must meet standard 7(a) eligibility requirements and qualify as a manufacturer under NAICS codes 31, 32, or 33 (the first two digits of your primary six-digit NAICS code).

Your business must meet SBA size requirements to qualify as a small business. The SBA determines whether you count as a "small business" based on your specific NAICS code. You can look up the size standards here.

For SBA 7(a) loans, the business owner has to be creditworthy. The lender will check a FICO® Small Business Scoring Service℠ (SBSS℠) credit score. The SBSS score evaluates business and personal credit. 

Learn more about SBA 7(a) loan requirements here. 

Beyond the size of your business, lenders will evaluate:

• Cash flow strength. Your business needs to demonstrate a debt service coverage ratio (DSCR) of at least 1:1 either from historical financials or projections showing you'll hit that ratio within two years of first disbursement. (Basically, it means your business generates enough cash flow to cover debt obligations.) The lender calculates this assuming that you’ll use the full loan amount and amortize it over the longest term of the loan, factoring in your complete debt load.
• Management capability. Lenders want to see depth of manufacturing experience and strong day-to-day operational management. If principals aren't on-site daily, you'll need a solid management structure in place.
• Reasonable repayment ability. The SBA's credit standards emphasize cash flow as the primary source of repayment. If your cash flow analysis or projections show your business can't repay the loan in a timely manner, the application gets declined regardless of available collateral.

What are allowed uses of SBA manufacturer loan funds?

MARC proceeds can fund any short-term working capital need of your manufacturing operation, including:

• Inventory purchases
• Raw materials
• New production projects
• Accounts payable
• Seasonal cash flow gaps
• Scaling operations for new customers
• Export-related expenses

You can also leverage the available equity in your existing manufacturing facility or equipment to expand working capital through a MARC line of credit.

What you cannot use MARC funds for

There are some ways these loan funds cannot be used:

• Refinancing non-working capital debt.
• Changes of ownership (though it is possible to get a MARC loan simultaneously with an ownership change to support working capital needs).
• Paying delinquent withholding taxes or trust funds like sales taxes.
• Floor plan financing (loans used to purchase inventory held for resale, such as vehicles or appliances).
• Paying creditors in a position to sustain a loss.

These restrictions keep MARC focused on its core purpose: providing flexible working capital that helps manufacturers grow and take on new business.

How does the SBA American manufacturer loan compare with SBA 7(a) and SBA 504?

The main advantage MARC offers over standard 7(a) is the revolving structure option and rules specifically designed for manufacturers' working capital cycles. The 504 program serves a completely different purpose — financing fixed assets rather than working capital — so manufacturers might use both programs for different needs.

SBA loan costs and fees overview

The SBA has granted a blanket waiver on the requirement to seek prior written approval when assessing extraordinary servicing fees on MARC loans. 

Application process

Your SBA lender will guide you through the loan process. The process usually looks like this: 

1. Determine your eligibility. Confirm your business qualifies under a NAICS code starting with 31 to 33, and that you meet SBA size standards for your industry. Ensure your business meets all SBA loan requirements, including owner citizenship requirements, current on other federal debt payments, etc. (See SBA loan requirements.)
2. Choose your lender. Work with an SBA-approved lender. Many lenders have Preferred Lender Program (PLP) status, letting them approve loans using delegated authority rather than waiting for SBA review. This can expedite the process.
3. Gather your documentation. The lender will generally want to see up to three years of business tax returns, or will access them from the IRS. You’ll need to provide current financial statements, personal financial statements for owners with 20% or more ownership, and a detailed debt schedule.
4. Submit your application. Your lender enters the application into E-Tran, the SBA's electronic system. For PLP lenders, this can generate a loan number immediately. For non-delegated processing, the SBA reviews the application before approval.
   
   Note that there will be a credit check for each owner with ownership of 20% or greater. The SBA system generally pulls credit using the FICO® Small Business Scoring Service℠ (SBSS℠) which evaluates both personal credit and business credit.
5. Work through underwriting. The lender analyzes your cash flow, collateral, management team, and ability to repay. They'll prepare a detailed credit memo addressing all SBA requirements. If the lender requests additional information, provide it as soon as possible.
6. Close the loan. If your application is approved, you'll sign loan documents, publicly establish your security interests in collateral (otherwise known as perfecting your interests), and meet any other conditions required for funding.
7. Receive disbursement. For revolving lines of credit, the lender determines how you’ll get the funds, whether it's open access, tiered by year, or based on borrowing base certificates. For term loans, you typically receive a lump sum of funds. 

Documents you will need

SBA loans have a reputation for requiring quite a bit of documentation, but don’t let that dissuade you. Your lender will guide you through the process. Be expected to provide these items. 

Business financials

You may be required to provide the following information:

• Up to three years of business tax returns with all schedules.
• Year-end balance sheets and income statements for up to three years.
• Current interim financial statement and balance sheet (within 120 days).
• Detailed debt schedule showing all business obligations.

Tip: Make sure your bookkeeping is up to date before you apply.

Cash flow projections (if not meeting 1:1 debt coverage historically):

Lenders must ensure your business can make future payments from cash flow, either based on historical cash flow or projections (for startups): 

• Monthly projections for at least 12 months.
• Two years of detailed projections with supporting assumptions.
• Justification for revenue growth or expense reductions.
• Industry trend comparisons.

Ownership and management

The experience of the owners and management can help a business qualify for an SBA loan. Lenders will review: 

• Personal financial statements for all 20%+ owners (within 120 days).
• Business and personal tax transcripts.
• Documentation of management experience in manufacturing.
• Management agreements if principals aren't on-site daily.

Collateral information

SBA loans require business owners to pledge available collateral to cover the loan amount. A loan can’t be declined solely due to lack of collateral. To substantiate collateral, the lender will require: 

• Detailed listing of all business assets.
• Equipment lists with values.
• Real estate appraisals if applicable.
• Current UCC search results (by the lender).

Additional documents required

• Lease agreement if renting your facility.
• Franchise documents if operating under a franchise.
• Verification of U.S. citizenship or lawful permanent resident status for all required parties.
• Life insurance information for key principals.
• Articles of incorporation or organization (for corporations).
• Operating agreement or bylaws (for LLCs or partnerships).
• Business licenses.

The lender may request additional documentation based on your specific situation. Having these core items ready can help speed up the application process.

Final loan approval is subject to SBA and lender review and underwriting standards.

It can take a month or more to get approved, so don’t wait until you urgently need funds to apply.  

SBA manufacturer financing use cases

Here are a few examples illustrating how a small business may use MARC loan funding: 

Example 1: Scaling for a major contract

A precision parts manufacturer with fifteen employees lands a contract with a Fortune 500 automotive supplier. The contract requires tripling monthly output, which means buying $400,000 in additional raw materials and components upfront. The company has strong cash flow but limited working capital reserves.

A $750,000 MARC revolving line lets them purchase materials for the first several production runs. As they invoice the customer and collect payment, they pay down the line. When the next production cycle starts, they draw funds again. 

Example 2: Bridging seasonal demand

A food manufacturing company faces extreme seasonality, with 70% of annual revenue concentrated in a four-month period. They need to build inventory three months before peak season but can’t finance it from operating cash.

A $1.2 million MARC revolving line covers inventory purchases in months six through nine. By month 12, they collect receivables and pay the line back to zero. The following year, they repeat the cycle. This gives them reliable access to capital for a full decade of seasonal cycles.

Example 3: Equipment-backed expansion

A metal fabrication shop owns their 20,000-square-foot facility and $800,000 in CNC equipment outright. When a major customer wants to consolidate suppliers, the shop needs additional working capital to handle larger order volumes.

They use a MARC revolving line to leverage the equity in their existing assets, accessing $1.5 million in working capital without having to refinance or purchase new equipment. This frees up capital for inventory and staffing to handle the increased volume.

Bottom line

The SBA’s MARC loan program offers flexible, dedicated financing for small manufacturers who need working capital to grow. If your business qualifies, this revolving or term loan option could help you manage inventory cycles, scale production, or seize major contracts.

Frequently asked questions

Can SBA MARC loans be used for long-term financing?

MARC term loans max out at ten years while revolving loans have a 10-year draw period followed by a 10-year term-out period. If you need longer-term financing, particularly for real estate or equipment, the SBA 504 program offers maturities up to 20–25 years. Manufacturers may use both programs if they qualify — MARC for working capital and 504 for fixed assets.

Are SBA MARC loans a revolving line of credit or term loan?

Either. The lender structures the loan based on your needs. Revolving lines make sense when you have cyclical working capital needs. Term loans work better when you need funds for a specific purpose or project that you'll pay off over time. You can't convert a term loan to a revolving loan, but revolving loans must eventually term out and be repaid.

Can working capital be included alongside equipment financing?

MARC proceeds can only fund working capital needs. If you need both working capital and equipment financing, you'd typically use a MARC loan for working capital and either a standard 7(a) loan or 504 loan for equipment. The SBA allows you to combine these programs as long as you're not exceeding maximum loan and guarantee limits.

Do startups without operating history qualify?

Yes, it is possible to qualify as a startup, but you will need compelling projections. Without historical financials showing adequate cash flow, your projections must demonstrate debt service coverage of at least 1:1 within two years of the first disbursement. Your projections need detailed supporting assumptions that justify why a lender should rely on projections instead of a track record.

Lenders will scrutinize your management team's manufacturing experience more heavily for startups. Strong industry experience and a detailed business plan may support your application. Orders in hand or letters of intent from potential customers also may also help.