8 Ways the U.S. Government Can Help You Finance Your Small Business Exports
by Caron_Beesley, Community Moderator
- Created: May 28, 2013, 7:24 am
- Updated: March 2, 2014, 10:28 pm
Looking to expand into overseas markets?
Whether you are entering the export market, looking to upgrade your equipment or facilities in preparation for exporting, or helping your international buyers do business with you – there’s a U.S. government financing program that can help.
With two thirds of the world’s purchasing power residing outside the U.S., the SBA is acutely aware that these global consumers play an important role in the long-term success of America's small businesses, and SBA is working to help small business owners across the country grow their businesses in this global economy.
In fact, small businesses now constitute 34 percent of total export dollars, and comprise approximately 97.8 percent of all exporters. Of course, success in exporting doesn’t just lie with financing. SBA also provides counseling and training (via U.S. Export Assistance Centers and SBA’s online Learning Center) to ensure that small businesses have the tools they need to tap into the global market. Since FY 2009, SBA has guaranteed 6,400 loans to small business exporters worth over $3.3 billion, generating over $6.3 billion in exports.
So what financing programs are available? Both SBA and the Export-Import Bank (the official export credit agency of the United States) offer flexible loan and credit programs. Here’s what you need to know:
SBA Export Loans – Financing Your Working Capital Needs, Export Transactions, and Facility Upgrades
Let’s start with the simplest and quickest loan product that the SBA offers – the SBA Export Express Program. This loan program offers eligible small businesses up to $500,000 in financing. As with all SBA financing programs, SBA doesn’t lend business the money directly. Instead, it provides a guarantee to the lending bank or institution that in turn lends your business the money – alleviating the investment risk for the bank. What this means is you will work directly with your bank to obtain your loan. Assuming everything is good with your application, loans can be approved by the SBA within 36 hours or less.
You can use these funds for any export development activity – including financing specific export orders or expanding production facilities. You can also purchase equipment, inventory or real estate and translate marketing literature into a foreign language. It’s also the only government loan that funds participation in tradeshows or trade missions.
Learn more about the program and eligibility requirements on SBA’s Export Express Loan Program page.
If you are already in a position in which you are able to generate export sales and need additional working capital to support these sales or ensure you don’t lose them, take a look at SBA’s Export Working Capital Program (EWCP). EWCP loans again are provided through banks, and fund export transactions, including labor and materials, from purchase order to collections. They can help you even out cash flow as you support longer export sales cycles. Loans are available up to $5 million and can support short-term needs such as a single contract of ongoing export sales over 12 months. Read more here.
If you need to upgrade your facilities or equipment and are adversely affected by import competition, you might be eligible for SBA’s International Trade Loan Program. It provides up to $5 million to acquire, construct, renovate, modernize, improve, or expand facilities and equipment in support of exporting. You can also use the funds to refinance an existing loan. However, they can’t be used as working capital. Read more about eligibility and the applications process.
U.S. Export-Import Bank – Financing For Your International Buyers and More
The U.S. Export-Import Bank (Ex-Im Bank) is an official U.S. government credit agency that assists businesses of all size with their export financing needs. Ex-Im Bank essentially fills gaps in trade financing and assumes credit and country risks that many commercial lenders are unable or unwilling to accept.
Like the SBA, Ex-Im bank offers a Working Capital Guarantee Program for small business exporters through lending partners with whom it has agreements. There is no limit to the loan amount (unlike SBA’s Working Capital Program, which caps out at $5 million).
Ex-Im Bank also offers financing for your international buyers, for example, if your purchasers need financing to purchase U.S. goods and services and no other financing is available or interest rates aren’t in their favor. Financing may also be available for refurbished equipment, software, certain banking and legal fees, and other in-country costs and expenses. Three programs are offered:
- Ex-Im Bank – Loan Guarantee Program – Gives you some level of risk mitigation against non-payment by a foreign buyer or having the order go to a local competitor. Your foreign buyer is the lender and they must service the debt.
- Ex-Im Bank – Direct Loan Program – Provides fixed-rate financing to creditworthy buyers.
- Ex-Im Bank – Finance Lease Guarantee Program – Guarantees lease financing of U.S. goods and services to creditworthy international lessees.
Other Export Financing Sources
The USDA also provides export financing to your international buyers by providing credit guarantees to foreign banks to encourage food and agricultural exports to buyers in countries where credit is necessary to maintain or increase U.S. sales, but where financing may not be available without the guarantees. Read more about USDA Export Guarantee Programs.
For more information about any of these loan programs, contact your local U.S Export Assistance Center. These offices are staffed by officials from SBA, the Export-Import Bank and other organizations that can help you find the right financing for your needs. To help with your wide exporting goals, take a look at business.usa.gov’s variety of programs and support.
Also check out this useful side-by-side comparison of U.S. government export assistance financing programs.
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