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A weekly look at Wyoming business questions from the Wyoming Small Business Development Center (WSBDC), part of WyomingEntrepreneur.Biz, a collection of business assistance programs at the University of Wyoming.
By Bryson Patterson, export finance specialist, U.S. Small Business Administration, guest columnist
“What financing options are available to support growth in export markets?” Ryan, Torrington
One of the biggest obstacles faced by small businesses is a lack of growth capital. This is a problem faced by start-up companies as well as firms opening a second location or taking on a large new client.
Any time a business is in a growth phase, cash is needed. Exporting is no different. Whether exporting for the first time or expanding to the 10th international market, small businesses need cash for inventory, labor, shipping and often the longer sales cycle associated with exporting.
But, as everyone knows, banks are conservative enough when it comes to financing domestic sales. Throw exporting and foreign buyer risk into the underwriting equation, and access to capital just gets tougher.
To overcome this barrier, the Small Business Administration (SBA) offers an enhanced suite of loan guarantees to provide an incentive to commercial lenders who lend to small business exporters. Instead of SBA’s usual 75 percent guarantee that’s provided for domestic business loans, a 90 percent guarantee is conferred when banks lend to exporters.
SBA has three specific export programs:
-- International Trade Loan (ITL): ITL guarantees term loans of up to $5 million for any purpose (real estate, equipment, permanent working capital or debt refinancing) that will improve the competitive position of the exporter.
-- Export Working Capital Program (EWCP): EWCP guarantees revolving lines of credit of up to $5 million for inventory and costs associated with fulfilling export orders.
-- Export Express: This program is designed as a streamlined hybrid of the other two programs, guaranteeing loans up to $500,000 that help exporters expand sales.
Note that these export programs cover the whole spectrum of business financing -- from pre-export financing to fixed assets to market development costs. Even when a firm is just beginning to export, it may qualify for these enhanced guarantees.
Connecting your lender with SBA export programs is the key to unlocking these programs’ power for your company. To help facilitate this, SBA has a network of export finance specialists who can help you connect with active lenders in your community and help craft an export financing package that fits your company’s needs.
Contact Bryson Patterson with SBA at the Denver U.S. Export Assistance Center for more information at (303) 844-6622 or firstname.lastname@example.org.
A blog version of this article and an opportunity to post comments are available at http://wyen.biz/blog1/.
The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, email email@example.com or write 1000 E. University Ave., Dept. 3922, Laramie, WY, 82071-3922.