When a small business decides to sell its goods and services in another country, financing can be a key factor.
Because of the intense competition for export markets, U.S. companies often need to offer attractive payment terms to international customers in order to make a sale. The exporter will have to assume financing costs, which can be higher if a transaction is viewed as risky.
The company’s working capital also can be strained by unexpected—and unexpectedly large—surges in orders.
Unfortunately, a company may find that, as it expands globally, its longtime bank won’t be able to meet all of the company’s financing needs.
The good news is that the U.S. government, in its continuing effort to assist the private sector’s ability to export, offers a number of financing programs that meet the needs of exporters and lenders alike.
The Fantastic Four of Export Financing
The Export-Import Bank (EX-IM), the official export credit agency of the United States, assists in financing the export of U.S. goods and services to international markets. EX-IM does not compete with private sector lenders but provides export financing products that fill gaps in trade financing.
The U.S. Small Business Administration (SBA) offers loan guaranty programs that enable the small business exporter to obtain working capital to finance pre- and post-shipment needs, increase global competitiveness, enhance their ability to export a product or service, and acquire long-term fixed assets.
The Foreign Agricultural Service (FAS), which is part of the U.S. Department of Agriculture, improves foreign market access for U.S. food and agricultural products, builds new markets and improves the competitive position of U.S. agriculture in the global marketplace.
The Overseas Private Investment Corporation (OPIC) helps U.S. businesses invest overseas, fosters economic development in new emerging markets and complements the private sector in managing risks associated with foreign direct investment.
Finding the Right Program for You
Together, these four agencies offer services that can assist small businesses in a number of ways:
Export development and working capital financing // The following programs help U.S. businesses to expand overseas and fund export transaction costs or financing for the export of goods or services by providing the liquidity needed to accept new orders, enter new markets, and compete more effectively in the international marketplace.
» Export Working Capital Program —www.sba.gov/content/export-working-capital-program#
» Export Express Program — www.sba.gov/exportexpress
» Working Capital Guarantee Program — http://www.exim.gov/products/workingcapital/
Facilities Development Financing // These are loans to acquire, construct, renovate, modernize, improve or expand facilities and equipment used in the United States to produce goods or services for export.
» International Trade Loan Program — www.sba.gov/content/financing-your-small-business-exports-foreign-investments-or-projects
Financing for your international buyers // The programs enable U.S. businesses to assist their international buyers in locating financing to purchase U.S. goods and services when financing is otherwise not available or there are no economically viable interest rates on terms over one to two years.
» Loan Guarantee Program – www.exim.gov/products/loanguarantee/index.cfm
» Direct Loan Program – www.exim.gov/products/direct-loan.cfm
» Finance Lease Guarantee Program — www.exim.gov/products/finance-lease-guarantee.cfm
» Export Credit Guarantees – www.fas.usda.gov/excredits/ecgp.asp
Investment project financing // This financing enables U.S. businesses to acquire financing for large-scale projects that require large amounts of capital, such as infrastructure, telecommunications, power, water, housing, airports, hotels, high-tech, financial services and natural resource extraction industries.
» Small and Medium-Enterprise Financing —www.opic.gov/what-we-offer/financial-products