Some, in fact, have so many opportunities before them that they need a larger facility or more equipment to meet the demands. Getting a capital investment loan from a bank, however, has not been easy.

“In my opinion, the financing market for capital loans was absolutely awful from the fourth quarter of 2008 to the middle of 2010. The level of credit they would provide was very low, and the credit-worthy disqualifications were incredibly stringent,”says George Spilka, president of George Spilka and Associates, a national investment banking firm that specializes in middle market, closely held corporations.

Spilka says that there has been a turnaround in banking attitudes, and loans are now more reasonable for credit-
worthy customers. For a company looking to expand its facility or build a new plant, Spilka advises the development of a thorough business plan indicating explicitly why the loan is needed and what benefits it would bring.

“You want to project where your business is going,”Spilka says. “What growth and expansion do you expect if you get these funds and expand your facility? Why do you feel that you will be able to realize that growth —for instance, why won’t it go to your competitors instead?”

Spilka tells processors to be as detailed as possible in the business plan. Don’t just list the monetary growth that you expect with a new or expanded facility, but explain how you plan on achieving that growth. If you’re planning on increasing the sales force, adding new products or entering a new market, it should be detailed.

“It’s going to show the banker where the flow of funds is going to be coming in to pay back his loan eventually,”he says.

Also advisable is to prepare a 12 to 24-month forecast to show how the benefits of the added square footage or new facility will benefit the bottom line.

Spilka says that the best time to apply for a loan will be from late 2011 through 2013. However, he adds, factors that apply to a specific processor could alter that timeline.

“It’s when you have the demonstrable need, when you’ve put together the package, and when the results are the most appealing to a banker,”he notes.