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CPE Forum. Financing Exports November 9, 2010. Helping you start, grow and succeed. Trade Finance. Finding the right mix for your company of: Workable cash flow Payment assurance Winning customers and increasing sales. SBA Loan Programs for Exporters.

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cpe forum
CPE Forum

Financing Exports

November 9, 2010

Helping you start, grow and succeed.

trade finance
Trade Finance

Finding the right mix for yourcompany of:

  • Workable cash flow
  • Payment assurance
  • Winning customers and increasing sales
sba loan programs for exporters
SBA Loan Programs for Exporters
  • Export Working Capital Program (EWCP)
  • Export Express
  • International Trade Loan (ITL)
export working capital program
Export Working Capital Program
  • 90% Guarantee to the bank
  • $4.5 million is maximum SBA guaranteed portion
  • $5 million maximum loan amount
export working capital program1
Export Working Capital Program
  • Transaction financing
  • No minimum financial ratios to qualify
  • Single Contract or Revolving
  • Quick turnaround time
  • Preliminary commitment availability
slide6

Export Working Capital Program Eligibility

Company meets SBA new size standards based on Net Worth and Average Income:

  • Net Worth less than $15 million (including affiliates)

and

  • Average net income of less than $5 million after federal income taxes (excluding any carry-over losses) for the preceding two completed fiscal years.
slide7

Export Working Capital Program Eligibility

  • Product is titled and shipped from the United States
    • SBA has no U.S. content requirement
    • Military sales are allowed
  • The borrower must be in business 12 months or with proven expertise
  • The borrower may be new to exporting
ewcp indirect exports
Applicants who produce products or services that will be exported, but who do not directly export their products are eligible for EWCP financing.

Manufacturers using an Export Trading Company

Suppliers to other domestic manufacturers who will export their final product

Requires certification from domestic customer that goods are being exported.

EWCP - Indirect Exports
ewcp use of proceeds
EWCP Use of Proceeds
  • Loan is used to acquire or produce goods or services for export and/or to finance the accounts receivable of such foreign sales.
  • Pre-shipment Guarantee
    • 100% Labor, Material and Overhead costs
    • Purchase products for resale
  • Post-shipment Guarantee
    • Foreign Accounts Receivable financing
  • Combination Guarantee
ewcp use of proceeds1
EWCP Use of Proceeds

Portions of the EWCP Line of Credit may be up to fund standby Letters of Credit when required as:

  • Bid Bond
  • Performance Bond
ewcp it s the transaction
EWCP – “It’s the Transaction”

Exporter’s ability to perform

Transaction evidenced by Purchase Order, Letter of Credit or signed contract

Acceptable payment by foreign buyer

  • Cash in Advance
  • Letter of Credit
  • Open Account (insured)
  • Open Account (no insurance)
ewcp advance rates
EWCP - Advance Rates
  • Determined on a case-by-case basis
  • Pre-shipment - limited to exporter’s cost of the product being exported (materials, labor and overhead) or the cost of purchasing a product for resale.
  • Post-shipment – Up to 85% on Receivables (no more than 60 days past due) and 90% on usance letters of credit.
ewcp collateral
EWCP - Collateral
  • Self-liquidating loan
  • First lien on all assets being financed
  • Personal guarantees of all owners of 20% or more who are active in the business (as with all SBA guarantees).
  • Other collateral as required by the bank on a case-by-case basis
ewcp fees
EWCP Fees
  • SBA guaranty fee of 1/4 of 1% of the guaranteed portion for loans with a 12 month maturity or less;

e.g: $2,250. for a $1 million line of credit

  • Through December 31, 2010: The SBA guaranty fees are waived on loans with a maturity greater than 12 months.
  • Business and lender negotiate interest rate and fees, not subject to normal SBA 7(a) limitations.
ewcp how to apply
EWCP - How to Apply
  • Exporters are directed to apply with a commercial loan officer at their existing bank.
  • The Bank forwards the application to the SBA at the local USEAC for approval if SBA support is needed.
export express
Export Express
  • Loans and Lines of Credit up to $500,000.
  • Lines of credit can be up to seven years maturity.
  • Through December 31, 2010: The SBA guaranty fees are waived on loans with a maturity greater than 12 months.
export express1
Export Express
  • Banks that are currently authorized under the SBA Express (domestic loan program) are automatically approved to use Export Express.
  • Approved banks make their own credit decision and use their own forms.
  • Lender receives a 90% guaranty on loans up to $350,000 and a 75% guarantee on loans between $350,000 and $500,000.
export express2
Export Express
  • Applications are processed using the existing SBA Express procedures
  • Eligibility:
    • Applicant must have been in business for at least 12 months
    • proceeds are to be used to develop or expand their export markets
export express use of proceeds
Export Express – Use of Proceeds

Proceeds may be used for any of the following purposes:

  • Transaction-specific financing of export sales, including backing standby letters of credit
  • General lines of credit for export purposes
  • Export marketing activities such as brochure translation or participation in a trade mission
  • Term loans for permanent working capital, machinery and equipment, or real estate
international trade loan itl
International Trade Loan (ITL)
  • Term loan with a maximum amount of $5 million
  • Maximum SBA guaranty of 90%
  • Can be combined with an EWCP line of credit
itl eligibility
ITL Eligibility
  • Loan proceeds will significantly expand an existing export market or develop new export markets; or
  • The applicant business has been adversely affected by import competition

And

  • Upgrading facilities or equipment will improve the applicant’s competitive position.
  • Application/business plan must document eligibility; i.e: export projections or evidence of adverse impact.
itl use of proceeds
ITL Use of Proceeds
  • Acquisition or improvement of production facilities or equipment to be used in the United States in the production of goods and services involved in international trade.
  • Permanent Working Capital
  • Debt refinancing is allowed if the original debt qualified for ITL financing.
itl fees
ITL Fees
  • Regular SBA 7(a) guaranty fees normally apply:
  • .25% for maturities less than 12 months
  • 2.0% - 3.75% on long term loans depending on loan amount.
  • Through December 31, 2010: The SBA guaranty fees are waived on loans with maturities greater than 12 months.
export finance

Export Finance

John P. Joyce

SBA Export Finance Manager

New England Region

U.S. Export Assistance Center

Boston, MA

john.joyce@sba.gov

Tel: (617) 565-4305

www.sba.gov/international