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SBA SBA EXPORT FINANCE PROGRAMS U.S. SMALL BUSINESS ADMINISTRATION Approximately 94% of all US businesses are classified as “small businesses’. [NAICS]

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slide1

SBA

SBA EXPORT FINANCE PROGRAMS

u s small business administration
U.S. SMALL BUSINESS ADMINISTRATION
  • Approximately 94% of all US businesses are classified as “small businesses’. [NAICS]
  • SBA assists small businesses by guaranteeing bank loans up to 90% for export financing. SBA also provides complimentary loan application assistance and technical assistance.
  • Houston’s Assets: “Energy Capital of the World”, Texas Medical Center, NASA’s Space Center, the Port of Houston [#1 US port in foreign tonnage], the Houston Airport etc. have created a ripple effect promoting global markets for area businesses.
slide3

] INTERNATIONAL TRADE (IT)

  • ] EXPORT WORKING
  • CAPITAL (EWC)
  • ] EXPORTEXPRESS(EE)

THREE EXPORT LOAN PROGRAMS:

http://www.sba.gov/oit

s b a offers 75 guaranty
S.B.A. offers 75% Guaranty:

1] INTERNATIONAL TRADE

LOAN GUARANTY (IT 75%).

Loan for Business-Related Real Estate,

Equipment, and Working Capital

[COLLATERAL MUST BE LOCATED IN THE U.S.]

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INTERNATIONAL TRADE PROGRAM (IT 75%):
  • For a business: 1] engaged or preparing to engage in export or2] adversely affected by imports.
  • Loan Proceeds: To purchase, construct, renovate fixed assets: such as office building, factory, warehouse, export storage, and/or equipment.
  • Not for refinancing or debt payment.
  • Unique Requirement: Applicant must provide a business plan supporting projected export sales.
international trade program it 75
INTERNATIONAL TRADE PROGRAM (IT 75%):
  • SBA’s maximum guaranty exposure for a fixed asset International Trade export loan is :
  • $ 1 Millionfor an International Trade bank loan. The maximum allowable loan amount is $ 2MM.
  • SBA loan guaranty is up to 75%.
  • Maximum loan term may be up to 25 years for real estate and 10 years for equipment.
  • All fees are controlled by SBA Regulations.
  • Collateral securing the loan must be located and used in the U.S.
u s s b a
U.S.S.B.A.

2] EXPORT WORKING CAPITAL LOAN GUARANTY PROGRAM (EWC 90%).

Collateral items purchased with loan funds are exported out of the U.S.

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EXPORT WORKING CAPITAL PROGRAM (EWC 90%):

The #1 need of exporters:FINANCING.

  • EWC relieves bankers from risk exposure: SBA may guaranty a bank loan up to $1,000,000.00 or 90% of the loan amount, whichever is less. Maximum bank loan amount for this program is also $ 2 Million .
  • SBA can help exporters cash-in on the global market by providing a Government guaranty for a bank loan.
slide9
EWC (90%): What is it?

An Export Loan Program which:

  • Provides short-term loan or a revolving line of credit financing to exporters.
  • Encourages lenders to make export loans almost risk free.
slide10
EX-IM BANK COUNTRY LIMITATION SCHEDULE:

1) Schedule highlights those foreign markets the US Govt. supports or restricts.

www.exim.gov/country/cntlimit.html

2) Refer to Schedule for any export restrictions on buyer’s country.

3) Restrictions imposed for Political, Economic or Legislative reasons.

ewc 90 what does it cover
EWC (90%): What does it cover?
  • Pre-shipment working capital: To purchase raw materials for manufacturing, or finished goods for direct or indirect export.
  • Indirect Exports: Goods sold to another U.S. company, however, final destination of goods is overseas.
ewc 90 what does it cover12
EWC (90%): What does it cover?
  • Post-shipment exposure: extends the loan payment term allowing the seller time to receive sales proceeds from the buyer and/or to complete post shipment operations, such as installation or final assembly, performed by US employee of seller, in the destination country.
ewc 90 what does it cover13
EWC (90%): What does it cover?
  • Combination of pre- and post- shipment financing [ for example: manufacture modular housing, allowing for time to assemble overseas, and payment from buyer].
slide14
EWC (90%): what does it

cover ? (continued)

Services on a Existing Contract: Foreign contract for construction, engineering, architectural etc. [loan proceeds for inventory required to perform on contract, travel, US payroll expenses etc.].

Standby Letter of Credit: Bank guarantees the work performance overseas of the U.S. exporter [similar to a Performance Bond].

slide15
EWC: Who is eligible?

The exporter must:

  • Must be as U.S. citizen or have a valid “Green Card” [must be verified with INS].
  • Meet SBA’s industry size-standards .
  • Have been in business for at least 12 months [not necessarily in exporting].
  • IRS tax returns must be verified.
slide16
By-Employees:SIZE STANDARDS

Manufacturing ---- 500 to 1500 employees or less.

Mining ---- 500 employees or less.

Wholesale Trade ---- 100 employees or less.

By-Annual Gross Receipts:

Gen. & Heavy Construction--------------$ 27. 5 million

Special Trade ----------------------------$ 11.5 million

Retail Trade -------------------$ 5. to $ 21. million

Real Estate -------------------$ 5. to $ 18.5. million

Services ---------------- $ 2. 5 to $ 21.5 million

Agriculture -------------- $ 0.750 to $ 9. million

North American Industry Classification System (NAICS).

ewc what collateral will be required to support the loan
EWC: What collateral will be required to support the loan?
  • Assignment of proceeds from one or more:

Confirmed Letter of Credit.

Foreign receivables.

Service contract.

EXIM export credit insurance.

  • Fixed assets ( usually to secure long-term loans [1 year or more] or weak credit).
  • Personal guarantees by owners:( owners with 20% or more ownership in business).
major difference ewc what does sba look for the credit focus the transaction not the business
MAJOR DIFFERENCE:EWC: What Does SBA Look For?The Credit Focus: The transaction, NOT the business.
  • Is the deal“DO-ABLE” ?
  • How reliable is therepayment source?
  • Can the exporterperform ? Does the exporter have the expertise?
ewc sba fees interest rates
EWC: SBA Fees & Interest Rates

SBA Guarantee Fees:

  • Loan term of 12 months or less: 0.25% of guaranteed loan amount.
  • Loan term over 12 months: regular 7a fee applies (between 1%-4%).

Interest Rates & Lender Fees:

  • Negotiable between lender and

customer: not controlled by SBA.

3 export express e e 75 85
3] EXPORTEXPRESS (EE 75-85%)
  • Maximum loan amount : $ 250,000.
  • SBA guaranty up to 85% for $150,000 or less. For loans from $150,000 to $250,000, SBA guaranty 75%.
  • Unique program where loan funds may be used to market your goods/services overseas. In addition, the purchase of fixed assets or working capital.
  • Only SBA Export program where Lender uses its own loan application, credit, and processing procedures. Only one SBA documents is required.
  • No criminal activity in personal history.
slide21

EWCP: Some limits

  • Purchase of American-made equipment and products ”to the greatest extent practicable”.
  • Limited sales to foreign military (U.S. Munitions List prohibited).
  • SBA follows EXIM Country Limitation Schedule.
slide22
Helpful Websites:

Basic Guide toExport:http://www.export.gov;

http://www.tradenet.gov;http://www.ita.gov/tic

Market research: http://www.usatrade.gov

Market Dev.&Links:http://www.usatrade.gov

http://www.buyUSA.com;Europages Business

directory: http://www.europages.com; Trade

Shows Worldwide: http://www.tscentral.com

ExportRegulations:http://www.bxa.doc.gov;

ATA carnet: http://www.usib.org.

e l a n
E. L. A. N.
  • Export Legal Assistance Network (E.L.A.N.) http://www.fita.org/elan
  • U. S. Small Business Administration and Federal Bar Association.
  • Initial consultation is FREE.

Contact: Sameer Mohan Esq.

or Jamie Joiner Esq.

Baker & Hostetler LLP

(713) 646-1314

sba sponsored free export resource assistance
SBA-Sponsored FREEExport Resource Assistance
  • SBA International Trade Officer:Najla Tanous (713) 773-6522/23: To finance existing export orders.
  • University of Houston S.B.D.C.Roberta Skebo

(713) 752-8400 : Free loan packaging for an SBA export loan application.

  • SCORE - Business Information Center (BIC),

(713) 773-6549: Start-up information to export.

  • S.B.D.C. International Trade Center Carlos Lopez, Director, for technical assistance.