Additional Clarificaton on the International Trade Loan Program

Newsletter Date: July, 2012

Additional Clarification on the International Trade Loan Program

Since the issuance of SBA Policy Notice 5000-1193, effective January 26, 2011, that authorized increasing the maximum loan size of the International Trade Loan (ITL) to $5 million, with a maximum guaranty amount of $4.5 million ($4.0 million maximum guaranty for any working capital component of an ITL) the St. Louis District staff have received a number of requests for clarification about eligibility for the program.  It is our hope that this article provides that clarification.

Beginning at the bottom of page 143 of Standard Operating Procedure 50-10-5(e), “Eligible Uses of Proceeds for International Trade Loans” include:

  1. Acquire, construct, renovate, modernize, improve or expand facilities and equipment to be used in the United States to produce goods or services involved in international trade and to develop and penetrate foreign markets;
  2. Working Capital; and
  3. Refinancing any debt that is not structured with reasonable terms and conditions, including any debt that qualifies for refinancing under Standard 7(a).”

Beginning on the upper half of page 129 of SOP 50-10-5(e) are “Additional Eligibility Requirements for International Trade Loans”, which states “(t)he Small Business Applicant must establish either of the following in order to be eligible”:

  1. That the loan proceeds will expand existing export markets or develop new export markets” and that “the Small Business Applicant must submit an export business plan … that contains enough information to reasonably support the likelihood of expanded export sales”and that ”Indirect exports are considered exports for purposes of determining eligibility …” and that “the Borrower must provide certification to the lender from the Borrower’s domestic customer … that the goods or services are in fact being exported.
  2. That the Small Business Applicant is adversely affected by import competition”, and that the “Small Business Applicant must demonstrate injury attributable to increased competition with foreign firms in the relevant market” 

And that in “addition to either 1 or 2 above, the Small Business Applicant must also be able to demonstrate that the loan will allow the Small Business Applicant to improve its competitive position”, providing documentation to SBA that “can support the fact that the loan will allow the Small Business Applicant to improve its competitive position.”

While SBA Procedural Notice 5000-1238 recommends that lenders use the 7(a) Loan Origination 10-Tab Submission Tool to submit ITL packages (as well as Standard 7(a), CAPLine, S/RLA, SLA and Dealer Floor Plan submissions), ITL and Export Working Capital Program applications continue to be processed locally by John Blum, Regional international Trade Manager for Kansas, Missouri, Nebraska and Oklahoma, who is co-located at the United States Export Assistance Center with the U. S. Department of Commerce’s U. S. Commercial Service.  To talk with John about SBA’s Export Loan Programs, or to schedule a meeting with you or with you and your customer, call him at 314-425-3304 or Bob Newman, SBA’s International Trade Officer for Eastern Missouri at 636-358-5941, 573-256-1794 or 314-539-6600, extension 239.

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