Options abound for companies seeking financing for exports

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Colorado businesses export about $8 billion of manufactured and agricultural products annually, and there are numerous resources and loans for business owners interested in – literally – expanding their horizons.

Small business owners considering exporting can find a wealth of foreign market research – by country and sector – on the Internet. Locally, the Office of International Affairs assists business owners, as does the World Trade Center and Export Assistance Center in Denver.

SBA loans

The SBA Export Express Program provides a guarantee of 90 percent on loan amounts up to $250,000. The loan can be used for transaction costs, fixed assets, equipment, translation services, foreign trade show participation or other working capital needs, said Dennis Chrisbaum, regional manager of the Small Business Administration’s International Trade Program.

Applicants must demonstrate that the loan will help the company enter a new market or expand an existing one. The loans are submitted electronically, Chrisbaum said, so they are “turned around in two or three days.”

Another source of funding is the SBA International Trade Loan.

Under the American Recovery and Reinvestment Act of 2009, it can guarantee up to 90 percent on commercial loans up to $2 million. Loan proceeds can be used for working capital and fixed assets, and terms can be as long as 25 years.

“Thirty percent of U.S. exports are done by small businesses,” Chrisbaum said. “That’s over $500 billion annually. It’s easy to connect with buyers around the world. Even a small business that has niche products can do business globally.”

One of the SBA’s clients, a woman who employs 10 people and sells animal nutritional supplements – mainly to Japan, has not had a decrease in exports, despite the economy.

“People love their pets and are still spending money on them – even if they’re cutting back on other spending,” Chrisbaum said.

Another company doing well is an alpine skiing supply company in Boulder, selling mountaineering equipment “all over Europe.”

Some other niche products that export well include mining-related engineering equipment, and low-end and high-end medical equipment and diagnostics.

Chrisbaum said there’s no reason why business owners shouldn’t use the resources the government has made available to establish a network of overseas partners.

“You pay for it every April 15,” Chrisbaum said. “You might as well take advantage of the services.”

Ex-Im Bank

Another resource for small businesses is the Export-Import Bank of the United States, an independent federal government agency.

“We have no minimum requirement and no maximum,” said Joseph Ringer, senior business development officer. “We work with the smallest of the small.”

One of the agency’s programs for exporters is the working capital program, which provides a 90 percent guarantee to any lender for business owners to manufacture or purchase a product for export – including work-in-process or raw materials, or for services a company provides out of the country, or for indirect exports.

Another Ex-Im program is credit insurance – either multi-buyer export, small business export or single-buyer export credit insurance.

“It’s the most popular program we have,” Ringer said, and allows exporters to sell to foreign buyers on credit terms up to a maximum of 180 days. “We protect the exporter for 95 percent of the commercial risk and 95 percent of the political risk – and there is no deductible.”

The insurance program “helps a small business owner sleep better at night – it’s risk mitigation,” Ringer said.

Insurance premiums are “affordable” because they’re subsidized by the government. For a $100,000 shipment, for example, the exporter’s insurance premium would be $550.

Ex-Im’s programs have three requirements. A company must be in business for at least one year; have at least one person working in the business full-time; and must have a positive net worth – assets must exceed liabilities.

While Ex-Im’s programs help business owners “bring something to the table” when they apply for loans, that doesn’t guarantee that financial institutions will approve the loan, said Tom Naughton, regional president of U.S. Bank.

Companies with a specialized product that are already in a foreign business relationship might be best served by Ex-Im loans, as might borrowers with a fundamental weakness in collateral.

“But there is a specific place for Ex-Im insurance,” Naughton said. “They are a resource.”

Although some companies are struggling to stay in business during a down economy, this is an opportune time for other businesses to strategically expand into foreign markets.

“It’s an excellent time to figure out how you’re going to diversify your risk,” Chrisbaum said. “If you can compete in the U.S. market, it’s very probable you can compete overseas, too – identify the niche.”