National Small Business Week: Financing Potential and Existing Trade Opportunities for Small Business
As the United States reflects this week on the key role that small businesses play in creating a healthy economy, their contributions to the nation’s globally competitive economy should also be recognized. Typically, international trade brings to mind large multinational corporations with complex global supply chains. However, as mentioned in this video produced by the US Small Business Administration (SBA), 97 percent of all exporters are small businesses. The SBA provides services that help make this possible by helping small businesses overcome one of their principal obstacles to exporting: the necessary financing. Specifically, the SBA manages three export financing programs: Export Express Loan Program, Export Working Capital Program, and International Trade Loan Program.
Export Express Loan Program. Of the three programs offered, the Export Express Loan Program is the quickest and simplest option provided to small business exporters. This program grants applicants access to up to $500,000 to fund virtually any export development expense and a variety of specific export transactions.
In order to be considered eligible, businesses must have been in operation for at least 12 full months and be able to demonstrate that the funding will directly support their export activity. They should confirm that their current bank is an SBA Export Express Program Lender. The applicant must submit the appropriate application forms to their bank, which includes the SBA’s Borrower Information Form. If the request for funding is approved, the lender will submit the eligibility information to the SBA. SBA will take up to 36 hours to review the request and approve or deny the loan.
Export Working Capital Program. The EWCP makes it possible for businesses to access up to $5 million in export loan advances. The export working capital can be used to purchase goods or services for export, support Standby Letters of Credit, and finance foreign accounts receivable. By gaining access to these loans, businesses are assured of more financial stability in their operations following a transaction and can be more flexible in export payment negotiations. More information on the EWCP and its benefits to small businesses can be found in this SBA Fact Sheet.
In order to access these funds, as with Export Express, businesses should confirm if their bank can underwrite EWCP loans. The SBA provides a list of both participating and preferred EWCP lenders. Upon receiving a request from the lender, the SBA will make a decision within 5 to 10 days for participating lenders or within 1 to 2 days for preferred lenders.
International Trade Loan Program. The International Trade Loan Program also provides up to $5 million in funds. However, the use of these funds is limited to the competitive needs of the business to “acquire, construct, renovate, modernize, improve, or expand facilities and equipment” that will ultimately be used in international trade transactions. These funds are not only available to help businesses enter or expand their presence in international markets but also to aid businesses that have been adversely affected by import competition.
Businesses seeking to improve their competitiveness must submit supporting documentation along with their application on how the loan will help their position. As with the preceding loan programs, businesses should consult the list of International Trade Loan Program Lenders and learn more about the program through this SBA Fact Sheet.
Small businesses need to know that the obstacle of securing export financing can be minimized. This summary of SBA export financing services is not an exhaustive list of all of the export financing opportunities provided by the government. Contact your nearest U.S. Export Assistance Center if your business can benefit from one of the SBA services described above.
Please contact TradeMoves LLC if you have any questions on how to benefit from the various export-related government services designed to assist small businesses.
Tyson Smith TradeMoves@TradeMoves.net
Shawn Jarosz SJarosz@TradeMoves.net 202.415.4016