Oh, the toll the subprime mortgage crisis has taken. Not only on the former home owners who defaulted on their subprime mortgages when the housing market took a dive, or on the financial institutions that suffered huge losses as people grew unable, or unwilling, to make housing payments, but also on manufacturers and other businesses in need of capital.

That's because the subprime mortgage crisis, combined with an already stagnant U.S. economy, has resulted in a credit crunch that has made obtaining capital for plant expansion, for equipment purchases and for acquisitions a much different ballgame than it was even 12 months ago.

"It's like night and day," says Nick Chini, director and principal with Bainbridge, a management consulting and mergers-and-acquisitions advisory firm. "We are in a tenuous, dynamic capital market environment" that is constantly changing, he says, depending on the industry, the capital structure, the news. "The need for real-time information is more critical than ever," he states.

"[Investors] are looking at the P&L and the projections for companies with a very different set of projections and assumptions about the future than before," he continues. "You have to work harder to get capital; you have to work harder to get debt."

It's true, according to Steve Hughes, a director at KeyBanc Capital Markets in the industrial corporate and investment banking group. "The debt capital markets are in utter turmoil," driven more by home loans and residential construction than anything, he says. "But it's had a ripple effect on everything else in the market."

What does this environment mean for small to mid-sized manufacturers in search of capital to grow or improve their businesses? It doesn't mean that capital can't be found. Indeed, "It's still out there. You can still fund large equipment or a process or expansion," Chini says. "[But] you have to work harder. You can still fund an acquisition; you have to put a little more time and effort into it."

Others agree. "There's capital still looking to be deployed," notes Hughes. Dick Cook, senior advisor for Focus LLC, a national investment banking focused on the middle market, points out that a large number of high net-worth investors have taken their money out of the stock market and shifted it into private equity.

And deals are happening. For example, earlier this year QPM Aerospace, a manufacturer of precision machined parts for the aerospace industry, received a $15 million investment from Key Principal Partners, a private-equity and mezzanine firm that invests in growing middle-market companies. In May, Bank of America Business Capital provided a $120 million credit facility to Sauder Woodworking, a privately held ready-to-assemble furniture manufacturer. The secured credit facility was used to refinance existing debt and for working capital purposes, according to a press statement.

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