A district built on small independent shops
Public sources describe the Los Angeles Fashion District, previously known as the Garment District, as a business improvement district in downtown Los Angeles. The same sources describe a neighborhood that caters to wholesale selling and has more than 4,000 overwhelmingly independently owned and operated retail and wholesale businesses selling apparel, footwear, accessories and fabrics.
That description fits the shape of the industry. Most garment businesses are small, independent and connected to each other as supplier, subcontractor and customer. A single cutting room might sew for several labels, and a label might source from several shops.
The production cycle in cash terms
- Fabric and trims. Purchased first, often in minimum quantities, and often paid on short terms.
- Patterns and samples. Pattern-making and sample runs cost labor before any order is confirmed.
- Cutting and sewing. Labor is paid weekly, frequently by piece, while production runs.
- Finishing and shipping. Pressing, labeling, packing and freight.
- Wholesale terms. The buyer pays after delivery, often on net-30 or longer terms.
The manufacturer funds almost the whole cycle before seeing a dollar from the buyer.
Where the squeeze happens
| Pressure | What it looks like |
|---|---|
| Big order from a new buyer | Fabric and labor needed in volume, payment weeks later |
| Slow-paying wholesale account | Next production run waits on the last invoice |
| Machine breakdown | Industrial sewing machines and cutters stop production |
| Seasonal lines | Spring and fall production crowd into narrow windows |
A worked example
For illustration only, and not our terms: a small manufacturer receives a first large order from a retail chain. The fabric bill and a few weeks of sewing payroll add up to a sum much larger than the shop usually carries. The retailer's payment terms are net-45. Without working capital the owner either declines the order, shrinks it or asks for a deposit the buyer may not give. With working capital, the owner can say yes, hire the extra operators, and meet the delivery date.
Equipment and workspace
Industrial machines such as straight-stitch, serger, buttonhole and cutting equipment are the production line. A shop that adds machines adds the capacity to take larger orders. A shop that cannot replace a failing machine loses throughput day by day. Because garment shops operate on thin margins, a single large repair can wipe out the profit from a good month.
How to apply
The application takes about five minutes, with roughly three months of business bank statements. We use a soft credit pull, require no tax returns and consider FICO 500 and above. Funding ranges from $25,000 to $5,000,000, with money possible in as little as 24 hours. Sole proprietors can apply. Start here.