USDA business loans have helped thousands of rural businesses across the country start and scale operations while powering the growth of American industry. USDA business loans for renewable energies, farming, food production, and supply chain operations are recent focus areas for the USDA programs since they are aimed at creating jobs and modernizing rural economies for the next generation.
Hundreds of business owners have worked with West Town Bank & Trust’s Government Guaranteed Lending team to leverage USDA business loans as a springboard for their growth. How would you use a USDA business loan program for your next success?
Zilks Plus Resources increases food manufacturing capabilities with a USDA Food Supply Chain Guaranteed Loan.
Zilk Plus, DBA ATX Specialty Foods, expanded their specialty food manufacturing facilities to scale their production and refinanced outstanding debt to increase their liquidity.
The Opportunity: Domestic Demand for Food Manufacturing
Demand for domestic food manufacturing has skyrocketed in recent years for a few reasons. More and more consumers are adding specialty health foods to their grocery carts, particularly those that are regionally produced and marked with ‘better-for-you’ labels like ‘organic’, ‘non-GMO’, and ‘gluten-free’ certifications.
Additionally, the pandemic’s impact on food manufacturing and food supply chains shifted the demand from goods produced overseas to food products made and packaged in the United States.
This demand created an opportunity for American businesses to serve more domestic clients while solving some of the inefficiencies caused by broken global links in the chain.
Already a successful of sauces, dips, spreads, condiments, and dressings for several regional restaurants in the Southwest market, Zilk Plus Resources had a unique opportunity to expand its contract manufacturing business and grow into a highly profitable Restaurant/Food Service Industry.
The company would be able to diversify its revenue and capture more of its market share if it could increase manufacturing capacity. Access to growth capital could help them make the most of the opportunity to dominate in a growing sector while playing to their strengths as an innovative manufacturer.
The Challenge: Securing Capital for New Equipment, Debt Refinancing, and Working Capital
Zilk Plus Resources was quickly reaching its capacity. The company needed over $4 million in new cooking and packaging equipment to keep up with its aggressive growth plans. The planned expansion was expected to handle growth resulting in up to $50-70 million in annual revenue.
Outstanding financial obligations made it difficult to access the funds needed to ramp up the expansion. The company still needed to invest in other lines of business throughout the expansion, and existing debt restricted access to capital that could have been used to fund the expansion.
The Solution: The USDA Food Supply Chain Guaranteed Loan Program
The USDA responded to food supply disruptions with the USDA Food Supply Chain Guaranteed Loan Program. This financing program was created to nurture domestic food manufacturing and distribution, fostering job growth while solving inefficiencies in outsourced food production that threatened inventory shortages across the country.
This loan program is eligible to be used for any business that is starting or expanding their operations to support middle-of-the-chain activities. Facility expansions like the one Zilk Plus Resources planned are eligible under the USDA Food Supply Chain Guaranteed Loan Program.
West Town Bank & Trust’s USDA lending team helped the company access $4.1 million in food manufacturing financing.
USDA Business Loan Program Utilized:
$4.1 MM – Food Supply Chain Guaranteed Loan Program
The Result: Increased Capacity Helped Secure Their Place as A Leader and Dominant Manufacturer in the Industry
The $4.1 million helped finance the expansion of an existing contract manufacturing facility, including the purchase of a significant amount of specialized equipment. Funds were also used to refinance existing debt, helping the business free up capital so that they could re-invest back into their growth.
Ultimately, the loan helped this business capitalize on an opportunity to grow its market share while freeing up cash flow for the business to pursue additional ventures as it grew.
What would you do with affordable capital?
Check your eligibility for the USDA Food Supply Chain Guaranteed Loan Program:
