Mini-Bonds for Manufacturing Companies

The mini bond came about by the government and finance companies search for investment opportunities and as a way to offer smaller companies access to the same privileges awarded to corporate bonds. Manufacturing companies are a great example of a small business that can profit from a mini bond. There are local and government bonds available as an alternative finance method for these small businesses. Instead of taking a loan out many manufacturers will take out a mini bond. It can help to off -set the cost of doing business as well as offer some great benefits to the company.

Tax Exemption

The interest on a mini bond is tax exempt. This means that manufacturing companies that qualify for a bond are able to take an exemption on the interest that they pay on the bond each year. This tax exemption also qualifies the investor to earning tax free interest.

Lower Interest Rates

A mini-bond offers a lower interest rate for pay back. The average mini-bond rate is one and a half to two and a half percent lower than conventional loan rates. This is a huge difference in payment over an extended amount of time. It will save a company thousands of dollars in interest in a year.

Flexibility

Mini bonds all have different rules. There are some general rules that apply to most but each mini bond has set regulations and requirements for the company to qualify for the mini bond. In exchange for meeting the said requirements some programs offer leniency or flexibility in terms.

Local Mini-Bonds

Local, state and federal programs exist for mini bonds. Each has its own agenda and what they are trying to accomplish. Local based mini bonds usually are trying to focus on growth in a certain area or promote hiring by the influx of money aimed at certain manufacturers based on location.

Manufacturing companies along with other small businesses can greatly benefit from a mini bond. It acts as a loan however has different rates and benefits than a standard loan. Manufacturing companies usually have a high cost up front before they can even market and sell their goods so using a mini bond program to help out is a good move. It has a slight risk to the bank and the investors that purchase the bond however with the sale of the manufactured goods the bond will be re-paid and the company will now have working capital.