Financing your global business

Transcription

1 Financing your global business How SBA promotes access to capital for US exporters Jeff Deiss US Small Business Administration Office of International Trade San Francisco, CA

2 The 2 nd component of international finance 1. Financing for the foreign buyer the terms extended to the buyer while assuring that everyone gets paid 2. Financing for the exporter s business Fulfilling export orders Positioning the firm for export success

3 Financing for the exporter What do youneed to get the deal done?

4 Two types of financing that an exporter needs 1. To fulfill export orders working capital for production and pre-shipment costs (raw materials, inventory, labor, etc.); post-shipment carrying costs (assuring sufficient cash flow while offering competitive terms) 2. To position the firm for export success fixed assets, equipment, permanent working capital, debt restructuring to improve competitive position and be more efficient

5 As US exporters move toward Open Account terms Cash in advance means using the foreign buyer s funds for your working capital Open account The exporter needs export working capital financing a need for business financing a supportive lender as your partner backed by SBA (or ExIm) 90% loan guarantees

6 SBA works with lenders to unlock both kinds of financing. How? With loan guarantees for commercial lenders.

7 SBA s 3 Export Programs Specialized 7(a) loans for financing your exporter: 1. International Trade Loan (ITL) Positioning the firm to export 2. Export Working Capital Program (EWCP) Fulfilling export orders 3. Export Express Smaller loans for either need

8 SBA assistance is limited to small businesses What is a small business? Tangible net worth of $15 million, and 2-year average NET income after taxes (excluding carryover losses) of $5 million So small business can actually be pretty BIG...

9 SBA Export Lending The highest % guarantee the Export BOOST!

10 The EXPORT BOOST Typical federal (including SBA) loan guarantees range from 50% to 75% SBA export loans receive: 90% Why? Because exports are critical to national economic success

11 SBA s export financing programs #1 Export Working Capital Program (EWCP) Working capital to fulfill the export order 90% guarantees on loans up to $5 million Only export working capital (or standby letters of credit) Asset-Based or Transaction-Based lines; revolving Advance rates of 75-90% on export sales SBA s lowest guaranty fee (¼%) Typically 1 year loans; re-issued annually No SBA prescription on interest rate or fees

12 SBA s export financing programs #2 International Trade Loan (ITL) Positioning the firm for export 90% guarantees on loans up to $5 million Equipment, real estate, refinancing, permanent working capital (No transfers of ownership) Financing for projects that improve the competitive position of US exporter so as to increase exporting Term loan: RE -25 yrs; M&E or WC -10 yrs It s just a 7(a) loan with a 90% guarantee Use your PLP authority for ITL approvals.

13 SBA s export financing programs #3 SBA Export Express Fast-track approvals for smaller export-related loans 90% guarantees on loans up to $350,000 75% guarantees on loans up to $500,000 Use lender s own underwriting/collateral standards Any export development activity fixed assets; market development; refinancing; general line of credit ifat least 70% will be export-related related Term loan or revolving line Simplest, most flexible export program

14 Export Finance Assistance Jeff Deiss Regional Export Finance Manager, SBA, San Francisco