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Opportunities for Community Banks :. Community Affairs Webinar Series. Federal Guarantee Programs that Support Export Lending to Small Business. Dennis R. Chrisbaum Director, International Trade Finance, SBA Michael Jackson Director, City/State Partners, Ex- Im Bank Teri Ryan

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Community affairs webinar series

Opportunities for Community Banks:

Community Affairs Webinar Series

Federal Guarantee Programsthat Support Export Lending to Small Business

Your presenters

Dennis R. Chrisbaum

Director, International Trade Finance, SBA

Michael Jackson

Director, City/State Partners, Ex-ImBank

Teri Ryan

Branch Chief, Risk and Asset Management, USDA Foreign Agricultural Service

Stephen Fancher

President and CEO, Florida Export Finance Corporation

James Moschella

Examination Specialist, FDIC

Your presenters:

National export initiative
National Export Initiative

“Because the more products we make and sell to other countries, the more jobs we support right here in America… Tonight we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America. To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports…”

President Barack Obama

State of the Union Address

January 27, 2010

National export initiative1
National Export Initiative

Announced March 11, 2010 by President


1. Double exports in five years

2. Create two million new jobs


  • Create Export Promotion Cabinet

  • Increase technical assistance

  • Increase export financing

  • Increase business advocacy

  • Strengthen trade agreements

The export promotion cabinet july 2012
The Export Promotion Cabinet, July 2012

To Maximize the Effectiveness of Federal Programs, the Federal Government will:

  • increase the national base of small- and medium-

    sized enterprise exporters by 50,000 by 2017,

    (2) expand the reach of federal export assistance—including trade financing--and counseling to small businesses, and

    (3) ensure better delivery of export promotion services domestically and overseas.

U s global business solutions
U.S. Global Business Solutions

Export Promotion Cabinet, Objective #2:

Expand Access to Small Business Trade Financing

1) trade financing perceived as too complex by

many lenders

2) not high volume nor profitable for lenders

1) reduce the complexity and present a streamlined package of financing options,

2) focus only on mainstream products with greater volume potential



Separating facts from myths
Separating Facts from Myths


“Small businesses don’t export.”


  • 296,000 SMEs (98% of all exporters) exported more than $700 billion in 2011, representing 33.3% of all known U.S. exports.

  • Very small companies (fewer than 20 employees) account for 70 percent of all exporting firms.

  • Find out how important exporting is to your state:

Perception vs reality
Perception vs. Reality

Lender Perception

“Lending to exporters is too risky”


Out of all of the SBA Sub-program codes, the Export Working Capital program has the lowest loss rate and the lowest default rate.

Perception vs reality1
Perception vs. Reality

Lender Perception

“We can’t use SBA export loan programs, since our bank doesn’t have an international department.”


  • An international department isn’t necessary.

  • The SBA/Ex-Im Bank USEAC Regional Managers will work with any bank to walk them through the process.

  • SBA loans are made to your customer down the street, not to a foreign entity in Mexico, China, or elsewhere.

One stop shop for export business needs
One-Stop Shop for Export Business Needs

Goals of Export Promotion Cabinet

  • Grow revenues and jobs through exports and the number of SB exporters—add 50,000 by Dec. 2017

  • Expand the base of financial institutions and service providers who facilitate exports—add 250 trade financing originators by Dec. 2015

    Solution to Increase Access to Trade Finance

  • Reduce complexity by packaging trade financing and marketing options that seamlessly meet exporter needs

  • Simplify marketing materials and increase outreach and training to meet the needs of their financial institutions

  • Streamline access to international experts, credit products, and business services for exporters and lenders—build volume

One stop shop for export business needs1
One-Stop Shop for Export Business Needs


  • Tailor the options to the stage of exporter development and capacity of the financial institution

  • Combine key trade and commercial finance products and services in a single menu of options made for mainstream use: U.S. Global Business Solutions

  • Offer a seamless, low-cost transition among options

  • Provide a menu of customized financing solutions for more advanced exporter needs: The Specialized Global Solutions (SGS) program

What might a sme need
What Might a SME Need?

  • Working Capital for Export Development:

  • Attend trade shows

  • Secure CE mark, international patent or trademark

  • Meet potential business partners

  • Vet potential buyers, agents or distributors and purchase foreign credit reports

  • In-country promotions

  • Translation of website/product literature and other marketing costs

Solution sba export express
Solution: SBA Export Express


  • to $350,000 with 90% guaranty

  • $500,000 with 75% guaranty

  • Processed by SBA-approved ExportExpress lenders

  • Working capital: 7 years; Fix assets: up to 25 years


  • Entering or expanding in foreign market

  • In business for at least 12 months (can be waived by lender if the applicant’s key personnel have export expertise and successful business experience and lender does conventional underwriting, not relying on credit scoring)

Solution sba export express1
Solution: SBA Export Express

Proceeds may be used for any “export development activity,” such as:

  • Translation of product literature or website

  • Participation in a trade show or on a trade mission

  • transaction-specific financing of export deals, including standby letters of credit

  • general lines of credit for export purposes

  • term loans for permanent working capital, machinery, equipment, or real estate used in the production of goods or services for export

What might a sme exporter need
What Might a SME Exporter Need?

Working Capital and Credit Insurance for Export Orders:

  • Inventory, materials, labor, other production costs

  • Foreign accounts receivable insurance

  • Insurance and freight costs

  • Bank fees related to the transactions

  • Standby-letters of credit to guarantee bid, performance, or advance payments

Working capital for export transactions
Working Capital for Export Transactions

  • SBA Export Express—to $500,000

  • Guaranteed loan; 7 years maximum working capital

    2. Ex-Im Bank’s Global Credit Express—to $500.000

  • Direct loan, if credit is not elsewhere available

  • Provides businesses with export history or orders with short-term, working capital

  • Terms: either 6 or 12-month revolving line of credit

  • Line can support general expenses of exporting, including export development and transactional costs.

  • Credit scored

Working capital for export transactions1
Working Capital for Export Transactions

3. SBA Export Working Capital—to $5 million

  • 90% guaranty; $4.5 million guaranty

  • Maximum term, 3 years; typically, 1 year

  • Guaranty fee if 12 months or less: .25% (1/4 of 1%)

    Transaction-Based Financing (Purchase order financing)

    • Single Order or Revolving Line

    • Most supplier and production costs through collections

      Or, Asset-Based Line-of-Credit

  • W/C for pre-shipment, post-shipment or both

    • Borrowing Base: inventory, WIP, (insured) A/R

      Advance rates:

    • up to 75% against inventory and WIP

    • up to 90% against foreign accounts receivable

  • Working capital for export transactions2
    Working Capital for Export Transactions

    4. SBA Working Capital CapLine

    • Up to $5 million loans with 75% guaranty

    • Maximum term: 10 years

    • Benefit: One line to support both domestic and international sales

    • Required: credit insurance on foreign A/R

    • One-to-one collateral ratio:

      • Advance rates up to 50% against inventory and equipment;

      • 80% against A/R and real estate

    Mitigate transactional non payment risk
    Mitigate Transactional, Non-Payment Risk

    Solution: Ex-Im Bank’s Trade Credit Insurance

    • Up to 95% coverage against non-payment due to commercial and political risk

    • Express Insurance: 5 day turn-around, up to 20 buyers

    • Insure world-wide buyers or single buyer—policy options


    • Marketing—bigger orders

    • Financing—can add to borrowing base

    • Reduced complexity—no need for letters of credit

    • Health—sleep at night


    • ~65 cents per $100 invoiced amount

    • 25% discount paired with any SBA or Ex-Im Bank loan

    What might an experienced sme exporter need
    What Might an Experienced SME Exporter Need?

    Term Loan for fixed assets:

    • Machinery or equipment to expand production in order to meet foreign demand

    • Retooling expenses necessary for metric production or to meet other standards

    • Permanent working capital

    • Real estate needed as a result of expanding export sales

    Solution sba international trade loan
    Solution: SBA International Trade Loan


    • A 7(a) loan up to $5,000,000 for plant and equipment

    • maximum guaranty: 90% up to $4.5 million

    • either: a) expanding because of exports, or

      b) adversely impacted by imports and

      c) will improve company’s competitive position

    • a combination of fixed assets or term loan with W/C

      -- maximum Working Capital guaranty: $4,000,000

    • maximum term: 25 years; 10 years for working capital

    • refinancing is allowed

    • can be process by PLP lenders

    • can be used for “on-shoring” if conditions above met

    • business plan required--application must document eligibility requirements (i.e. export projections or evidence of adverse impact by imports)

    All four sba loans can be used to support indirect exports
    All Four SBA Loans Can Be Used to Support Indirect Exports

    • Applicants who produce products or services that enter into the export channel, but do not directly export their products

      • Manufacturers using an Export Trading Company

      • Suppliers to other domestic manufacturers that export directly

    • Requires certification from domestic customer that goods are, in fact, being exported.

    What else might an experienced sme exporter need
    What Else Might an Experienced SME Exporter Need?

    Term Loanfor the Foreign Buyer:

    • Ex-Im Bank’s Medium Term loan guarantee to a lender that finances a foreign buyer’s purchases of U.S – made capital equipment and any related services.

    • BENEFITS: Enables an exporter to sell large ticket capital equipment to a foreign buyer on favorable credit terms generally between 1 and 5 years and be cashed-out up front by a lender

    • ELIGIBILITY: Products must be of U.S. origin. Buyer must make a minimum 15% cash down-payment.

    • COST/FEES/TERMS: A variable exposure fee is based on the risk of the transaction and a commitment fee of 0.125%. The interest rate is negotiated between the lender and the foreign borrower.

    • RESTRICTIONS: Lenders must have a Master Guarantee Agreement in place to participate.

    What else might an experienced sme exporter need1
    What Else Might an Experienced SME Exporter Need?

    Working Capital Over $5 million:

    • DESCRIPTION: To purchase finished goods, raw materials, labor and fund overhead costs to fulfill export sales orders or to post a bid or performance bond. Guarantee 90% of the loan amount.

    • BENEFITS: Offers generous advance rates (up to 75% on inventoryand work-in-process, and up to 90% on foreign A/R).

    • HOW IT WORKS:Lender either approves under their own “delegated authority” or sends to Ex-Imfor concurrence. Loans may be revolving lines of credit or transaction-specific.

    • ELIGIBILITY: Company must be in business for at least one year with financial statements available on its operations. Goods and /or services exported must be of U.S. origin.

    • COST/FEES/TERMS: $100 processing fee. 1.75% annually, 1.25% available on a case-by-case basis for lower-risk transactions. Interest rate on the loan and any other fees are set by the lender.

    Usg programs for your export customers
    USG Programs for Your Export Customers

    • Export Development

      --SBA Export Express—to $500,000

      B. Working Capital

      --SBA Export Express—to $500,000

      --SBA’s Export Working Capital—to $5 million

      --SBA’s CapLine—to $5 million

      --Ex-ImBank’s Global Credit Express—to $500,000

      --Ex-Im Bank’s Working Capital—over $5 million

      C. A/R Payment Risk Mitigation

      --Ex-Im Bank’s Trade Credit Insurance programs

      D. Foreign Buyer Financing

      --Ex-Im Bank’s Medium Term Loan Program

      Please USE Them!

    Ex im bank field offices
    Ex-Im Bank Field Offices

    Regional Export Finance Centers

    Midwest Western

    Chicago Regional Export Finance Center Orange County, CA Regional Export Finance Michael Howard: 312-353-8081 David Josephson: 949-660-1341

    Detroit San Francisco Field OfficeJohn Toles: 313-309-4158 James Lucchesi: 415-705-2285

    Minneapolis SeattleDenis Griffin: 612-348-1213 John Brislin: 206-728-2264Northeast and Mid-Atlantic

    New York Regional Export Finance Center Thomas Cummings: 212-809-2650Southeast Southwest

    Miami Regional Export Finance Center Houston Regional Export Finance CenterSharyn Koenig: 305- 526-7436 Patrick Crilley: 281- 721-0465

    Atlanta North Texas Branch McKinney (Dallas), TXSusan Kintanar: 404- 897-6082 Kelly Kemp: 214-551-4959

    Sba s network of trade finance specialists at u s export assistance centers
    SBA’s Network of Trade Finance Specialists at U.S. Export Assistance Centers


    Territory: North Carolina, South Carolina, Eastern Tennessee

    Dan Holt 704-333-4886 x226


    Territory: Wisconsin, Illinois, Iowa

    John Nevell 312-353-8065


    Territory: Ohio, Western New York, Western Pennsylvania,

    Patrick Hayes 216-522-4731


    Territory: Texas, Oklahoma

    Rick Schulze 817-684-5506


    Territory: Colorado, New Mexico, Utah, Wyoming

    Bryson Patterson 303-844-6623 ext.218


    Territory: Michigan, Indiana

    John O'Gara 313-872-6793


    Territory: Florida , Puerto Rico, Virgin Islands

    Mary Hernandez 305-526-7425 ext. 21


    Territory: Minnesota, North Dakota, South Dakota

    Carlos Sosa 612-348-1642


    Territory: Louisiana, Arkansas, Mississippi

    Pellson Lau504-589-6730


    Territory: New York City & 5 Boroughs, Eastern Upstate New York, New Jersey

    Toni Corsini 212-809-2645


    Territory: Eastern Pennsylvania

    Robert Elsas 215-597-6110


    Territory: Oregon, Southern Idaho, Montana

    Jeff Deiss 503-326-5498


    Territory: Washington, Alaska, Northern Idaho

    Pru Balatero 206-553-0051 ext.228


    Territory: Kansas, Missouri, Nebraska

    John Blum1314-260-3788


    Territory: Georgia, Alabama,

    Kentucky, West/Central Tennessee

    Sandro Murtas 404-815-1496


    Territory: Virginia, Maryland, District of Columbia, West Virginia, Delaware

    William Houck 202-557.4063


    Territory: Maine, Vermont, New Hampshire, Massachusetts, Connecticut, Rhode Island

    John Joyce 617-565-4305



    Territory: Southern California, Southern

    Nevada, Arizona

    Martin Selander 949.660-8935


    Territory: Northern California - Fresno to the

    Oregon border, Northern Nevada, Hawaii,


    Jerry R. Avila 916-735-1708

    Questions Assistance Centers

    Primary Contacts:

    Dennis R. Chrisbaum, SBA

    [email protected]; 202.205.6885

    Michael Jackson, Ex-Im Bank

    [email protected]; 202.565.3479






    Foreign Agricultural Service

    United States Department of Agriculture

    GSM-102 Assistance Centers

    WHAT IS GSM-102?

    It’s not a loan…

    It’s not a grant…

    It’s a guarantee

    Backed by the full faith and credit

    of the United States Government

    PURPOSE OF THE PROGRAM Assistance Centers


    Promotes the export of U.S. agricultural products by facilitating the financing component via a credit guarantee.

    USDA guarantees the letter of credit to emerging markets where sales may not occur without the financing and guarantee.

    PROGRAM Assistance Centers



    Program Assistance Centers



    • Approved Countries/Regions

    • Approved Foreign Banks

    • Qualified U.S. Exporters

    • Approved U.S. Banks

    • Importers do not need to be approved

    MISCONCEPTIONS Assistance Centers


    GSM-102 is…

    • Not just for bulk commodities

      • High-value processed products are also covered

    • Not just for large corporations

      • Approximately 47% of participants are SME’s

    • Not just for large dollar transactions

      • Transaction sizes have no minimum. Many are under $1 million USD

    ELIGIBLE COMMODITES Assistance Centers


    • 100% produced in USA

    • High-Value products (90% U.S. Content)

    Consumer-ready - Intermediate - Bulk

    How MUCH IS THIS GOING TO COST? Assistance Centers


    GSM-102 Assistance Centers



    WITH GSM-102

    Carry 100% Risk

    U.S. exporter more likely to ship since USDA carries 98% of the risk and payment is received upon presentation of documents

    Presence of loan term extended by the U.S. bank to the foreign bank may encourage extension of credit by the foreign bank to the importer

    Importer now in better position to negotiate favorable loan terms with GSM-approved bank in the region

    U.S. exporter reluctant to

    ship without being paid

    in advance

    Bank in region may be

    unwilling to provide

    credit to importer

    Any financing to importer

    may have very short repayment terms & higher interest rates

    Carry 2% Risk

    Benefits to u s banks
    Benefits to u.s. Banks Assistance Centers


    Less risk – USDA assumes almost all risk in the event of nonpayment

    Ability to leverage country & foreign bank limits

    Reduce capital requirements due to USDA guarantee

    Ability to lend up to 2 years

    Ability to lend at reduced rates because of USDA guarantee

    Establish or improve correspondent banking relationships

    Service U.S. exporter clients & expand relationships

    Foreign Bank

    Benefits to an exporter Assistance Centers


    • Open new markets and expand sales where risk may be greater

    • Minimal cost – fees average about 1 percent

    • Reduce importer and foreign bank risk

    • Get paid quickly by assigning guarantee to U.S. bank and delivering shipping documents that conform with L/C

    • Ability to lower all-in-costs to the buyer

    GSM-102 Assistance Centers

    How to get started?

    U.S. Bank

    Provide most recent audited financial statements

    Documentation from federal or state agency regulator

    Identify shareholder ownership & management

    Contact information of principal and U.S. regulator

    GSM-102 Assistance Centers

    How to get started?

    Get a DUNS number


    Submit qualification application

    Negotiate sales contract with buyer

    Contact U.S. bank (if assigning guarantee)

    Submit request for guarantee/pay guarantee fee

    GSM-102 Assistance Centers


    Africa & Middle East

    Central Asia


    Southeast Asia



    South America


    Central America


    South Korea


    Registrations Assistance Centers(USD Billions)


    $5.32 billion

    $4.12 billion

    $4.13 billion

    $3.09 billion

    $3.11 billion

    $1.44 billion





    Global usage fy 2011 2012 in usd millions
    Global Usage Assistance CentersFY 2011 – 2012 (in USD millions)


    $ USD Millions

    +Eurasia Region discontinued in 2012

    TOP COMMODITIES Assistance CentersFY 2012


    FY 2013 Assistance CentersProgramming



    See how your business can benefit from GSM-102

    Contact Us

    Teri Ryan


    [email protected]

    Foreign Agricultural Service

    United States Department of Agriculture

    Florida Export Finance Corporation Assistance Centers


    A not for profit corporation created and funded by the State of Florida by the Florida Export Finance Corporation Act of 1993-

    FL. Statutes 288.770-288.779.

    Legislative mandate to increase job opportunities and income for residents of Florida by providing financial, technical and consulting assistance to small and medium sized Florida Companies in support of their export sales.

    • FEFC financial assistance is available only for exporters and transactions which meet the following requirements:

    • The exporter/borrower must be registered to do business in Florida and be able to produce a current corporation, partnership or proprietorship registration.

    • The exporter/borrower must have less than 250 employees. Full and part time employees are included in this requirement.

    • The exporter/borrower must have less than $6,000,000 of net worth.

    • The equity owner of the exporter/borrower must sign the FEFC application, all loan documents, and personally guarantee the loan.

    • The exporter/borrower must have a specific and verified order from a foreign buyer and the loan must be made to support the order.

    • The goods or services must be shipped from Florida.

    • The maximum FEFC guarantee amount is 90% of the loan or $500,000, which ever is the lowest.

    • The maximum term for guarantee is one year.

    FEFC will not offer financial assistance to companies that qualify for the Ex-Im Bank or the SBA Working Capital Loan Guarantee programs. Most likely reason for non-qualification for these federal government programs is lack of collateral, short time in business, lack of profitability, or poor financial conditions.

    FEFC will issue a guarantee for 90% of a working capital loan made by a lender to an approved exporter up to a maximum liability to FEFC of $500,000. The guarantee is subject to certain conditions which the lender must adhere to.


    The most important are as follows: loan made by a lender to an approved exporter up to a maximum liability to FEFC of $500,000. The guarantee is subject to certain conditions which the lender must adhere to.

    • The loan must be revolving.

    • Loan advances are not given to the borrower, only to a supplier and in payment of items required in order for the borrower to fill a qualified foreign order.

    • In some cases the borrower (sometimes the lender) must obtain trade credit insurance covering nonpayment by the foreign buyer. FEFC will help in obtaining such insurance.

    • All payment from the foreign buyer must be sent directly to the lender.


    The FEFC Guarantee may prevent a small business loan from being “Classified” by the bank regulators.


    • Medium term (over 1yr.) loans being “Classified” by the bank regulators.commitments arranged on behalf of small Florida exporters $1,797,665,000

    • Export value of Political and Credit Risk Insurance arranged to support sales of small Florida exporters $ 248,800,000

    • Export value covered by FEFC loan guarantee commitments for small Florida exporters $ 393,731,000

    • Total value assisted (100% small business/approx. 72% minority and women owned) $2,440,196,000

    • Total for 2012 activities $ 48,970,000

    • Total Grants received (1993/2012) $12,590,000 Capital - $1,000,000 Operating Expenses $ 13,590,000

    • Net Worth of FEFC - 12/31/12 $ 9,578,658

      Total number of seminars - 382

      FEFC seminar attendance - Exporters 13,074 - Bankers 2,498

    • FEFC Status - Non stock not for profit corporation with IRS 501(c)3 status

      13 Member Board of Directors (3 Government/10 Private Sector)

      Loan Defaults – 25 ($3,710,991 Net Loss)

    • Legislative Mandate - To increase job opportunities and income for residents of Florida by providing financial, technical, and consulting assistance to small and medium sized Florida companies in support of their export sales.

    5.3 being “Classified” by the bank regulators.



    Regulatory perspectives

    Regulatory Perspectives being “Classified” by the bank regulators.

    Regulatory Benefits being “Classified” by the bank regulators.

    Portion of the loan guaranteed could receive a preferential capital risk weight under Part 325 of the FDIC Rules and Regulations.

    Risk Issues being “Classified” by the bank regulators.

    Have the right people, policies, and procedures in place before entering a new business line.

    Risk Issues being “Classified” by the bank regulators.

    Fully understand the guarantying agency’s requirements for underwriting, servicing, and liquidation processes.

    Risk Issues being “Classified” by the bank regulators.

    Know your customer from the Credit Risk, Anti-Money Laundering, and Office of Foreign Assets Control (OFAC) perspectives.

    Risk issues execute proper due diligence prior to entering into any third party vendor relationship

    Risk Issues being “Classified” by the bank regulators.

    Execute proper due diligence prior to entering into any third-party vendor relationship.

    Reference Material being “Classified” by the bank regulators.

    Supervisory Insights, June 2011 - SBA Lending: Insights for Lenders and Examiners

    Small Business Lending Initiatives

    Reference Material being “Classified” by the bank regulators.

    FIL-44-2008 - Guidance for Managing Third Party Risk

    Bank Secrecy Act Guidance

    Jim Moschella, Examination Specialist [email protected]


    For further information

    Email us at: being “Classified” by the bank regulators.

    [email protected]


    Check back with our website:

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