Manufacturing growth can take many forms.

For one company, it may mean automating a production process. For another, it could mean purchasing a building, adding another production line, accepting a larger customer contract, or acquiring another business.

Each opportunity creates a different capital requirement.

In today’s environment, manufacturers continue to evaluate investments in technology, automation and smart-manufacturing capabilities while navigating an environment in which maintaining financial flexibility remains important.

For eligible small manufacturers, SBA financing can provide several ways to support growth. The key is understanding which type of financing may align with the investment being made.

Manufacturing growth is creating different capital needs

A recent Deloitte Manufacturing Industry Outlook points to continued investment in smart-manufacturing technologies, including automation, analytics, sensors and cloud-based capabilities.

But technology is only one area where manufacturers may need capital.

Growth can require investment in:

• Equipment
• Automation
• Inventory
• Working capital
• Production capacity
• Facilities
• Commercial real estate
• Business acquisitions

Those needs should not necessarily be financed the same way.

A long-term asset such as a building creates a different capital requirement than inventory for a large customer order.

Understanding that distinction can help manufacturers evaluate their financing options more effectively.

Equipment and automation

Automation can help manufacturers increase capacity, improve productivity, reduce bottlenecks, or add capabilities.

But financing the machine is only part of the decision.

An equipment project may also require:

• Installation
• Technology integration
• Facility modifications
• Training
• Inventory
• Additional working capital

For eligible businesses, SBA 7(a) financing can be used for qualifying machinery and equipment as well as other eligible business purposes.

For projects heavily concentrated in qualifying long-term fixed assets, SBA 504 financing may also be worth considering.

The important first step is calculating the complete investment.

Working capital for larger orders

Growth can create cash flow pressure before it creates cash.

A manufacturer that wins a major contract may need to purchase materials, increase inventory, add labor, and fund production before receiving payment.

For eligible manufacturers, SBA 7(a) financing can support qualifying permanent working-capital needs.

The SBA 7(a) Working Capital Pilot may provide another option for businesses that need revolving access to capital.

Depending on the structure, WCP financing can support eligible contracts or projects or provide advances against qualifying inventory and accounts receivable.

This can be particularly relevant when the company has demand and production capability but needs additional liquidity to execute the opportunity.

Expanding production capacity

A manufacturer operating near capacity may need to invest across several areas simultaneously.

For example:

• Equipment: Additional machinery or another production line
• Facility: More production space or improvements
• Inventory: Additional raw materials
• Labor: More employees or shifts
• Working capital: Cash to fund increased operations before customers pay

The financing strategy should consider all of these requirements.

Focusing only on the equipment or facility can underestimate the amount of capital the business needs to successfully complete the expansion.

Purchasing or expanding a facility

A manufacturer that has outgrown its current location may decide to purchase a larger owner-occupied facility or expand an existing property.

SBA 504 financing is designed for qualifying major fixed assets and may be used for eligible owner-occupied commercial real estate, construction, facility improvements, and long-term machinery and equipment.

SBA 7(a) financing may also be used for certain eligible real estate and building needs.

The appropriate structure depends on the project and the other capital requirements associated with the expansion.

For example, a manufacturer purchasing a building may also need equipment and working capital after the move.

Those needs should be evaluated together.

Acquiring another manufacturing business

Building new capabilities internally is not the only way to grow.

A manufacturer may consider acquiring another company to gain:

• Production capacity
• Equipment
• Skilled employees
• Customers
• Geographic reach
• Products
• Intellectual property
• Supplier relationships

For qualifying transactions, SBA 7(a) financing may be used for complete or partial changes in business ownership.

But the purchase price is only one part of acquisition planning.

The buyer should also consider whether additional capital will be needed after closing for:

• Integration
• Inventory
• Equipment
• Employees
• Facility changes
• Working capital

The financing plan should consider the combined business, not simply the acquisition price.

Match the growth need to the capital need

Growth Strategy	Capital Requirements to Consider	SBA Option That May Be Relevant
Purchase equipment	Equipment + installation + working capital	7(a) or 504 depending on project
Automate production	Technology + equipment + integration + training	7(a) or qualifying 504
Accept larger contracts	Inventory + labor + receivables	7(a) / Working Capital Pilot
Add production capacity	Equipment + facility + inventory + working capital	7(a), 504 and/or WCP depending on needs
Purchase a facility	Real estate + improvements + equipment	504 or 7(a)
Acquire a business	Purchase price + integration + working capital	7(a) for qualifying transactions

This is not a determination of eligibility or the appropriate loan program. It is a starting point for understanding how the nature of the investment can influence the financing structure.

A 2026 change manufacturers should know about

A recent SBA policy change may be particularly relevant to manufacturers contemplating larger investments.

Effective July 4, 2026, eligible small businesses may combine SBA 7(a) and 504 financing for up to $10 million in cumulative SBA-backed financing, subject to applicable program requirements and lender underwriting.

The change can provide additional flexibility for qualifying businesses with larger capital requirements.

For a manufacturer, that could become relevant when a growth strategy involves several substantial investments rather than one isolated purchase.

For example, a company might be considering:

• Owner-occupied real estate
• New equipment
• Working capital
• Additional production capacity

Rather than looking at each financing decision independently, the business can evaluate how the different capital needs fit into a broader financing strategy.

Build a 12- to 24-month capital plan

One of the most useful things a growing manufacturer can do is look beyond today’s financing request.

Consider what the company expects to fund during the next one to two years.

That could include:

• Equipment — What machinery will need to be replaced or added?
• Capacity — Will existing production space be sufficient?
• Inventory — How much additional inventory will growth require?
• Customers — Are larger contracts or longer payment terms expected?
• Acquisitions — Could buying another company accelerate the growth plan?
• Debt — Are there existing obligations or maturities that should be considered?
• Liquidity — How much cash should the company preserve for unexpected opportunities or challenges?

The objective is not to predict every future investment. It is to understand how today’s capital decision could affect tomorrow’s flexibility.

Five questions to ask before financing growth

1. What is the company trying to accomplish? Define the business objective before choosing the financing product.
2. What is the complete capital requirement? Include all costs associated with executing the growth plan, not just the primary asset.
3. When will the investment begin generating cash? Revenue growth does not necessarily create immediate liquidity.
4. What happens if the plan takes longer than expected? Understanding a slower scenario can help determine how much liquidity should be preserved.
5. What could the company need to finance next? Today’s financing decision should support rather than unnecessarily limit the next stage of growth.

Finance the strategy, not just the transaction

A manufacturer purchasing equipment may actually be financing a capacity expansion.

A company seeking working capital may actually be preparing for its largest customer contract.

A business buying real estate may also need machinery, inventory, and cash to support a larger operation.

Looking beyond the immediate transaction can reveal the true capital requirement.

For eligible manufacturers, SBA 7(a), SBA 504 and the 7(a) Working Capital Pilot provide different tools that may support different parts of a growth strategy.

The appropriate structure begins with understanding what the business is trying to accomplish.

From there, the question becomes: What combination of capital can help the company execute that strategy while maintaining the financial flexibility to keep growing?

Sources

• U.S. Small Business Administration. “7(a) Loans”
• U.S. Small Business Administration. “504 Loans”
• U.S. Small Business Administration. “Small Businesses Now Eligible for $10 Million in SBA Financing”
• Deloitte. “2026 Manufacturing Industry Outlook”
• Federal Reserve Board. “The July 2026 Senior Loan Officer Opinion Survey on Bank Lending Practices”