The U.S. Small Business Administration (SBA) provides financial and business development assistance to help small businesses take advantage of export markets.
FINANCIAL ASSISTANCE
The SBA assists businesses in obtaining the capital needed to explore, establish or expand international markets. Export loans are available under SBA's guaranty program. If your lender is unable or unwilling to make a loan directly, you should request that the lender seek SBA participation.
EXPORT WORKING CAPITAL
PROGRAM
The Export Working Capital Program (EWCP) helps small businesses obtain
working capital to complete export sales. The EWCP can support single transactions
or multiple export sales.
Under this program, SBA can guarantee up to 90 percent up to $1,000,000, whichever is less.
Loan
maturities are generally for 12 months; revolving credit lines may be
renewed twice, up to a total of 36 months.
Use of Proceeds
Guarantees can be extended for pre-shipment working capital, post-shipment
exposure, or a combination of the two. A pre-shipment guaranty is used to
finance the production or acquisition of goods and services for export. A
post-shipment guaranty is used to finance receivables resulting from
export sales.
Interest Rates
Under the Export Working Capital Program, the maximum interest rates are
negotiable between the applicant and the lender.
Preliminary Commitments
Under the EWCP, you can apply directly to the SBA for a preliminary
commitment for a guaranty. With SBA's preliminary commitment in hand, you
can then convenience your lender to extend the credit. The lender must
apply to SBA for the final commitment.
REGULAR BUSINESS LOAN PROGRAM
Under this program, the SBA can guarantee up to 90 percent of a bank loan
or $750,000, whichever is less
Use of Proceeds
Small businesses that need money for fixed assets or term working capital
may be eligible for the SBA's regular 7(a) Loan Guaranty Program. Loan
guaranties for fixed-asset acquisition have a maximum maturity of 25
years. Guaranties for general purpose working capital loans have a
maximum maturity of seven years.
Eligibility
To be eligible, the applicant's business generally must be operated for
profit and fall within size standards set by SBA. Export trading
companies (ETCS) and export management companies (EMCS) also may qualify
for the SBA's business loan guarantee program. Ineligible borrowers
include businesses engaged in speculation or investment in rental real
estate.
INTERNATIONAL TRADE LOANS
The International Trade Loan Program provides long-term financing to help
small businesses compete more effectively and to expand or develop export
markets.
Under this program, SBA's guarantee can extend up to $1.25 million. SBA's maximum share for facilities and equipment is $1 million; the maximum share for working capital is $750,000. Loan maturities cannot exceed 25 years, excluding the working capital portion of the loan.
Use of Proceeds
Proceeds may be used to purchase or upgrade facilities or equipment, and
to make other improvements that will be used within the United States to
produce goods or services,
No debt payment is allowed. Proceeds can be used to buy land and buildings; build new facilities; renovate, improve or expand existing facilities; and purchase or recondition machinery, equipment and fixtures. The working capital portion of the borrowing could be in the form of either an EWCP loan or a portion of the term loan.
Eligibility
Applicants must establish either of the following to meet eligibility
requirements:
Loan proceeds will significantly expand existing export markets or develop new ones; or
The applicant's business is adversely affected by import competition.
SMALL BUSINESS INVESTMENT COMPANY (SBIC) FINANCING
A Small Business Investment Company (SBIC), approved and licensed by the
SBA, may provide equity capital or working capital exceeding the agency's
$750,000 statutory maximum. To be eligible for SBIC financing, at least
half of the small business's assets and operations must be in the United
States. Unlike the SBA, SBICs can invest in export trading companies in
which banks have equity participation as long as other SBIC requirements
are met.
BUSINESS DEVELOPMENT
ASSISTANCE
The SBA provides business development assistance to exporters, including
trade counseling, training, legal assistance and publications.
Counseling
Counseling is available through SBA's resource partners: the Service Corps
of Retired Executives (SCORE), the Small Business Development Centers
(SBDCS) and Small Business Institutes (SBIs). SCORE is an organization of
nearly 13,000 retired and active executives who volunteer their time to
provide management and technical assistance to small businesses. A SCORE
counselor can also assist you in developing an international business
plan. The local SBA office can match you with a SCORE volunteer
experienced in exporting.
SBDCS, located on college and university campuses, provide a wide variety of information services at more than 900 locations nation-wide. SBDC services include, but are not limited to, financial guidance, marketing, production, organizational development, engineering and feasibility studies, and technical assistance. Some SBDCs have designated international trade centers; all SBDCs provide export counseling, referral al and/or training.
In conjunction with colleges and universities across the United States, the SBA has established over 500 SBIS. Under the supervision of instructors, upper-level undergraduate and graduate business students provide intensive management assistance to small businesses that need special help.
Training
SBA district offices sponsor export training programs, often in
conjunction with SCORE, SBDCs and other public and private trade groups.
Offering something for the beginner as well as the more advanced exporter,
topics range from export financing to joint ventures. You can also learn
how to do business outside our borders through the various market- and
region-specific workshops offered.
Publications
The SBA publishes books and fact sheets on international trade, including
"Breaking Into the Trade Game: A Small Business Guide to Exporting," which
takes you step-by-step through the export process.
LEGAL ASSISTANCE
Under the Export Legal Assistance Network (ELAN), your local SBA office
can arrange a free initial consultation with an attorney to discuss
international trade questions. This is possible through an agreement
among the Federal Bar Association, the SBA and the U.S. Department of
Commerce. Questions may include contract negotiation, agent/distributor
agreements, export licensing requirements, credit collection procedures,
documentation and much more.
ADDITIONAL INFORMATION
The SBA has offices located throughout the country. For the one nearest
you, consult the telephone directory under "U.S. Government," or call the
Small Business Answer Desk at 1-800-8-ASK-SBA or (202) 205-7064 (fax).
For the hearing impaired, the TDD number is (202) 205-7333.
*Last Modified: 6-11-01