In my last post, I outlined some of the fundamental considerations for small businesses looking to enter the global export market.
The U.S government offers a great deal of information on this topic – from global marketing tips to advice on international trade laws.
This second post in the series focuses on the wide array of financial assistance programs offered by the government that are designed to help small businesses develop and expand export market opportunities.
An Overview of Export Financing Options
Government financing programs are primarily offered by two organizations: the Small Business Administration (which addresses the small business exports niche) and the Export-Import Bank of the U.S. (the federal government’s largest and most comprehensive trade finance agency).
These organizations offer working capital loans; financing for your international buyers; insurance and mitigation policies; grants to support feasibility studies, training for foreign business communities on U.S. business practices; and more.
Here is a brief summary of the small business export financing programs offered by these two organizations:
1) Small Business Administration (SBA) Export Financing
Available programs include:
- SBA Export Express Program – This program covers the initial costs of entering an export market by guaranteeing up to $500,000 in export development financing to buy or produce goods or to provide services for export. Export Express is only available through approved SBA Express lenders.
- SBA Export Working Capital Program – Most banks do not lend against export orders, export receivables or letters of credit. Because of that, some small businesses that export may lack necessary export working capital to support their export sales. That is where an SBA program can make the difference. These EWCP loans are targeted at businesses that are able to generate export sales and need additional working capital (up to $5 million) to support these sales.
- SBA International Trade Loan – This term loan is designed for businesses that plan to start or continue exporting or those that that have been adversely affected by competition from imports. The proceeds of the loan (up to $5 million) must enable the borrower to be in a better position to compete and can’t be used as working capital.
Get more details on these SBA export financing programs here.
2) Export-Import Bank Small Business Financing
The Export-Import Bank (Ex-Im Bank) is an independent U.S. government agency with the primary purpose of facilitating the export of U.S. goods and services. While the SBA concentrates specifically on providing government-backed loans for small businesses, the Ex-Im Bank, through its Small Business Initiative, provides entrepreneurs with access to specialized small business financing tools such as its working capital guarantee and export credit insurance.
These finance programs can help your small business increase sales by entering new markets, expanding your borrowing base, and offering your international buyers financing, while carrying less risk.
Use this guide to find out more about Ex-Im Bank's working capital loans and credit insurance programs.
- 8 Ways the Government Can Help You Finance Your Small Business Exports
- Small Business Export Portal – BusinessUSA.gov's online guide has information on everything from getting started in international trade, to financing, importing goods, trade agreements, business travel, and regulations relating to specific products.
- Export-Import Bank – Financial options for small businesses, international buyers, and exporters.
- The Global Small Business Blog – A definitive blog for entrepreneurs and small businesses interested in going global