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Exporting Can Increase Your Small Business Success

By: Deb Kantrud, Lender Relations Specialist
North Dakota District Office

Small businesses and entrepreneurs improve their success when they sell products globally. Plus, exporting adds more jobs and tax base in a community.

Small Business Administration (SBA) Administrator Linda McMahon said, “Businesses that export are less likely to go out of business and more likely to grow faster.” McMahon was speaking at a recent small business summit where she urged American small businesses and entrepreneurs to enter the global market, noting that only 1 percent of small businesses currently export their products overseas.

North Dakota businesses are exporting – especially oil and agricultural products. North Dakota exported $3.95 billion in 2016. While crude oil makes up 42.19% of the total exports from North Dakota, there were 1,328 unique items exported from the state in 2016. The 1,800 North Dakota companies exporting supported 34,000 jobs. Canada continues to be North Dakota’s number one export destination, followed by Mexico and Australia.  More North Dakota businesses exporting will make for stronger businesses and communities.

Carlos Sosa, SBA Regional Trade Finance Manager, said, “Typically when a small business looks to the Small Business Administration for export lending, it is an Export Working Capital Loan." The big reasons why lenders use Export Working Capital Loans is to be able to monetize export orders and receivables. The program provides lenders a 90 percent guaranty on a loan up to $5 million, which encourages lenders to take the risk to finance foreign accounts receivables and export foreign inventory.

“It has been shown time and time again that small businesses are the main global exporters,” Sosa said. “In the United States, it happens to be the same: 97 percent of all U.S. exporters are small businesses. And why are they exporting? Ninety-six percent of the world’s customers reside outside the United States.”

“In addition to reaching more of the world’s customers, the types of jobs created by firms that export are higher paying,” Sosa added. “U.S. exporters are in an enviable position. U.S.-made products are preferred in Latin America, Asia and the Middle East. The perception is that USA-made products are of a better quality and more durable than products made elsewhere.”

“This perception of USA-made machines is comparable to the Energizer bunny. That just keeps going.  That perception helps U.S. exporters,” Sosa said.

What does SBA offer to help?

The SBA offers financing, training and counseling to help small businesses access international markets and expand their export opportunities.

  • SBA Export Express offers financing up to $500,000. It is the simplest export loan product offered by the SBA and allows participating lenders to use their own forms and procedures. The SBA determines eligibility and provides a loan approval in 36 hours or less.
  • The Export Working Capital Loan provides advances for up to $5 million to fund export transactions from purchase order to collections. This loan has a low guaranty fee and quick processing time.
  • SBA's International Trade Loan Program (ITL) provides small businesses with enhanced export financing options for their export transactions. The ITL helps small businesses enter international markets and, when adversely affected by import competition, make the investments necessary to better compete. The ITL offers a combination of fixed asset, working capital financing and debt refinancing with the SBA’s maximum guaranty on the total loan amount.

And how does exporting help large and small North Dakota communities?

Sosa says that is an easy question to answer: SBA programs reduce the risk for lenders to help businesses export. Businesses increase their sales when they access global customers. These increased sales increase the number of jobs and the tax base in the community.

“In the overall scheme of things, it helps the U.S. trade balance,” he added.

SBA representatives are available to provide support and service, including:

  • Support and training to banks in making and servicing export loans; and
  • Counseling, training and financing to support small business export opportunities.

Deb Kantrud is the Lender Relations Specialist at the SBA District Office, Fargo. Her responsibilities include marketing all SBA lending programs and services; conducting outreach, training, and lender recruitment; and working with lenders needing assistance using SBA lending programs. She has 16 years working with regional council commercial loan programs and advising small business owners and entrepreneurs; including eight years as the executive director of the South Central Dakota Regional Council, Jamestown. She holds a bachelor’s degree from Dickinson State University and is a graduate of the Rural Leadership North Dakota program. She can be reached at deborah.kantrud@sba.gov.