SBA EXPORT LOAN PROGRAMS
Patrick Hayes, Regional Manager SBA Export Solutions Group U.S. Export Assistance Center 600 Superior Avenue, Suite 700 Cleveland, OH 44114 - 216-522-4731
National Export Initiative
• Double Exports in five years
• Expand U.S. government’s export promotion
efforts (Trade Promotion Coordination
Committee (TPCC) consisting of19 agencies
• Provide access to credit
Export.gov
• U.S. Government’s export portal
– market research
– trade events
– trade leads
– County Commercial Guides
– Much, much, much more……
SBA Export Loan Products
• Export Working Capital Program (EWCP)
– Up to $5 Million; 90% guaranty for short term loans and lines of credit for export purposes.
• Export Express
– Up to $500,000. Term loans and/or lines of credit for export purposes – streamlined processing procedures.
• International Trade Loan
– Up to $5 Million: now with a 90% guaranty. Term loans for
Export Working Capital Program
Eligibility
• Company meets SBA size standards
– Based on NAICS or Alternative Size Standard – NAICS -Manufacturing: under 500 employees
o can be as high as 1,500 employees
– Alternative Size Standard: Net worth less than $15 million and net profit less than $5 million (last 2 year average)
– Ex-Im Bank has no restrictions for size.
• In business 12 months or proven expertise
• No U.S. content requirement; Military sales allowable • Other SBA eligibility provisions
EWCP Use of Proceeds
Asset Based and Transaction Based
• Working Capital for production of export goods and services
• Financing of existing export receivables and export inventory
• Portions of the EWCP loan may be used to fund standby Letters of Credit when required as:
Bid Bonds
Performance Bonds
Two Types of EWCP Loans
EWCP
Transaction
Transaction Based EWCP
Self Liquidating Line of Credit
• Transaction Based EWCPs can be utilized for single export orders or multiple orders on a
revolving basis. No funds are disbursed until there is an export order in place. Funds are used by the borrower to produce goods for a specific export order. SBA requires secure payment method from foreign buyer which will be directed to pay down the EWCP
Transaction Based EWCP
Use of Proceeds
• To acquire/produce goods or services for export. EWCP funds can be used to finance up to 100% of exporter’s direct cost associated with a specific export transaction, not to exceed 90% of the overall export sale amount.
Example - Small business exporter lands a $1 Million export sale. The
production costs for the exported item is $700,000 – bank can therefore advance the entire $700,000 under the EWCP program.
• To support Standby Letters of Credit used as performance
Transaction Based EWCP
Indirect Exports
• Applicants who produce products or services that enter into the export channel, but do not directly export their products, are eligible for EWCP financing
– Manufacturers using an Export Trading Company – Suppliers to other domestic manufacturers
Transaction Based EWCP
Payment methods
• Transaction evidenced by Purchase Order, L/C or signed contract
• Acceptable payment by foreign buyer
Cash in Advance
Letter of Credit
Documentary Collections
Open Account (insured)
Open Account - No Insurance
No Insurance is required if:
• Receivables are from financially sound corporations, multinationals or highly-rated governmental entities in countries with minimal political risk (or)
EWCP - Collateral
• Self-liquidating loan
• First lien on all assets being financed
– Typically inventory, WIP and A/R
Two Types of EWCP Loans
EWCP
Transaction
Asset Based EWCP – Use of Proceeds
• To finance existing foreign accounts receivables. Advance rates up to 90%. Note: normally export credit insurance is required (foreign accounts receivable insurance)
• To finance existing foreign inventory. Advance rates up to 75%
Asset Based EWCP
MAXIMIZING THE BORROWING BASE
ASSET-BASED FACILITY SBA EWCP GUARANTEE Amount % Advance Collateral % Advance Collateral Exportable Inventory
Raw Materials $200,000 40 $80,000 75 $150,000 Work-In-Progress 200,000 0 0 75 150,000 Finished Goods 600,000 50 300,000 75 450,000 Subtotal $1,000,000 $380,000 $750,000
Foreign Accounts Receivable
Open Account $400,000 0 $0 90 $360,000 L/C Backed A/R 600,000 70 420,000 90 540,000 Subtotal 1,000,000 420,000 900,000
EWCP Fees
• One time guaranty fee of ¼ of 1% of the guaranteed
portion for loans with a 12 month or less maturity. This fee is reduced by half for veteran owned businesses.
• Deals initially booked for 12 months or less can be “re-issued” for ¼ of 1% the following year
• 51.9 basis point on-going fee paid by lender
EWCP Loans - How to Apply
• EWCP loans are submitted to the local Lender who
submits them to the SBA.
Export Express
• Loans and Lines of Credit up to $500,000.
Export Express
• The maximum loan amount under SBA Export Express is $500,000.
• Processed using the existing SBAExpress processing procedures
• Eligibility:
– applicant in business for at least 12 months
– proceeds are to be used to develop or expand their export (direct and indirect) markets
Export Express
• Proceeds may be used for any of the following purposes:
– transaction-specific financing of export deals, including standby letters of credit
– general lines of credit for export purposes
– export development activities such as brochure translation or participation in a trade mission
SBA Export Express Fees
Gross loan Amount 12 months or less More than 12 months
$150,000 or less 0.25% of guaranteed portion* 2% of guaranteed portion*
$150,001 - $500,000 0.25% of guaranteed portion** 3% of guaranteed portion**
• *This fee is waived on loans under $150,000 if approved before September 30, 2015
• **This fee is reduced by 50% for veteran owned businesses. • Export Express loan recipients also receive a 25% discount
Export Express
How to Apply
• Apply at any bank with SBA Export Express Authority. • Export Express Loans are processed in the same way that
International Trade Loan (ITL)
• The maximum loan is $5 million with a maximum SBA guarantee portion of $4.5 million. Lender gets a 90% guaranty.
The 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
International Trade Loans (ITL)
• Use of Proceeds :
– Facilities – Equipment
– Working Capital
– Debt refinancing is allowed.
• Business plan/application must document eligibility requirements (i.e. export projections or evidence of adverse impact).
International Trade Loans (ITL)
How to Apply
• Apply directly at your bank for International Trade Loans. Your bank can process through Preferred Lender
Getting Started – New To Export
SBA’s Export Business Planner
• A free downloadable tool to save and customize
• How to determine your export readiness
• Worksheets for global market research
• Financing information and options
• Customizable export and marketing plan
templates
Thank You!
Patrick Hayes, Regional Manager SBA Export Solutions Group U.S. Export Assistance Center 600 Superior Avenue, Suite 700 Cleveland, OH 44114 - 216-522-4731
