Motor Vehicle Gasoline Engine and Engine Parts Manufacturing

336310

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Cadence Bank (MS)

Average SBA Loan Rate over Prime (Prime is 7%) 2.66

Change of Ownership

Existing or more than 2 years old

Fixed Rates

SBA Loans for Motor Vehicle Gasoline Engine and Engine Parts Manufacturing: Financing Growth in Automotive Supply

Introduction

Motor vehicle gasoline engine and engine parts manufacturers are at the core of the U.S. automotive industry, producing critical components such as pistons, crankshafts, valves, and cylinder heads. Classified under NAICS 336310 – Motor Vehicle Gasoline Engine and Engine Parts Manufacturing, these businesses supply both original equipment manufacturers (OEMs) and aftermarket markets. Despite steady demand, manufacturers in this sector face capital-intensive operations, fluctuating raw material prices, and competitive global pressures.

This is where SBA Loans for Motor Vehicle Gasoline Engine and Engine Parts Manufacturing play a crucial role. Backed by the U.S. Small Business Administration, SBA loans provide affordable financing with longer repayment terms, lower down payments, and government-backed guarantees. For engine and parts manufacturers seeking to upgrade machinery, expand production lines, or stabilize cash flow, SBA financing offers a reliable path forward.

Industry Overview: NAICS 336310

Motor Vehicle Gasoline Engine and Engine Parts Manufacturing (NAICS 336310) covers establishments primarily engaged in manufacturing complete gasoline engines and replacement parts for motor vehicles. These businesses serve the automotive supply chain, ranging from OEM contracts with automakers to independent aftermarket distribution channels.

The industry plays a vital role in U.S. transportation, but it is capital-intensive and highly sensitive to global trade, consumer demand, and raw material costs. Competition from international manufacturers and the growing shift toward electric vehicles also pose strategic challenges.

Common Pain Points in Engine and Parts Manufacturing Financing

From industry forums, Quora discussions, and small business manufacturing groups, common financing challenges include:

High Equipment Costs – CNC machines, casting equipment, and precision testing systems require millions of dollars in upfront investment.
Raw Material Volatility – Prices for steel, aluminum, and alloys fluctuate significantly, impacting budgets and profitability.
R&D Investments – Constant innovation is needed to meet emission standards and improve engine efficiency.
Labor & Training Costs – Recruiting and training skilled machinists and engineers is expensive.
Global Competition – Overseas manufacturers often undercut pricing, forcing U.S. companies to invest in efficiency and quality improvements.
Traditional Bank Rejections – Many lenders hesitate due to the industry’s capital intensity and cyclical nature.

How SBA Loans Help Engine & Parts Manufacturers

SBA loans provide flexible, affordable capital to meet the unique needs of this sector:

SBA 7(a) Loan

Best for: Working capital, equipment purchases, expansions, or acquisitions.
Loan size: Up to $5 million.
Why it helps: Covers machinery upgrades, payroll, R&D investments, or supplier payments.

SBA 504 Loan

Best for: Major equipment and real estate investments.
Loan size: Up to $5.5 million.
Why it helps: Ideal for financing casting equipment, CNC machining centers, or expanding production facilities.

SBA Microloans

Best for: Smaller firms or niche aftermarket manufacturers.
Loan size: Up to $50,000.
Why it helps: Useful for tool purchases, safety upgrades, or launching new aftermarket product lines.

SBA Disaster Loans

Best for: Recovery after natural disasters or supply chain disruptions.
Loan size: Up to $2 million.
Why it helps: Provides working capital to repair facilities, replace equipment, or cover operational shortfalls.

Step-by-Step Guide to Getting an SBA Loan

Check Eligibility – Must be a U.S.-based for-profit manufacturer with a credit score of 650–680+ and repayment ability.
Prepare Documentation – Provide tax returns, financial statements, customer contracts, and equipment quotes.
Find an SBA-Approved Lender – Look for lenders with experience in manufacturing or automotive supply chains.
Submit the Application – Clearly outline how funds will support production, compliance, or expansion.
Approval Process – SBA guarantees up to 85% of loans, reducing lender risk. Approval typically takes 30–90 days.

FAQ: SBA Loans for Motor Vehicle Gasoline Engine and Engine Parts Manufacturing

Why do banks hesitate to finance this industry?

Banks often view engine and parts manufacturing as high-risk due to high costs, cyclical demand, and global competition. SBA guarantees reduce this risk, making approvals more accessible.

Can SBA loans finance new machinery and technology?

Yes. SBA 7(a) and 504 loans can cover CNC machines, testing equipment, casting systems, and other production machinery.

What down payment is required?

SBA loans usually require 10–20% down, compared to 25–30% with conventional financing.

Are startups eligible for SBA loans?

Yes, though lenders typically prefer applicants with automotive industry experience and a strong business plan. SBA microloans are often used by niche aftermarket startups.

What loan terms are available?

Working capital: Up to 7 years
Equipment: Up to 10 years
Real estate: Up to 25 years

Can SBA loans fund R&D and compliance projects?

Absolutely. Many manufacturers use SBA loans to finance emission-compliance projects, new product development, and efficiency improvements.

Final Thoughts

The Motor Vehicle Gasoline Engine and Engine Parts Manufacturing industry is vital to the U.S. automotive sector but requires constant investment to remain competitive. SBA Loans for Engine and Engine Parts Manufacturing provide manufacturers with affordable financing to upgrade equipment, expand capacity, and innovate for the future.

Whether you’re modernizing your production line, investing in R&D, or stabilizing cash flow, SBA financing helps engine and parts manufacturers drive growth. Connect with an SBA-approved lender today to explore your options.

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