Presentation on theme: "SBA EXPORT LOAN PROGRAMS Toni Corsini, Regional Manager SBA Export Solutions Group U.S. Export Assistance Center 33 Whitehall Street, 22nd flr New York,"— Presentation transcript:
SBA EXPORT LOAN PROGRAMS Toni Corsini, Regional Manager SBA Export Solutions Group U.S. Export Assistance Center 33 Whitehall Street, 22nd flr New York, N Y –
From the President We need to export more of our goods. Because the more products we make and sell to other countries, the more jobs we support right here in America. So tonight, we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America. To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports, and reform export controls consistent with national security. President Barack Obama State of the Union Address January 27, 2010
National Export Initiative Double Exports in five years Expand U.S. governments export promotion efforts (Trade Promotion Coordination Committee (TPCC) consisting of 19 agencies Provide access to credit Eliminate barriers that prevent open and fair access to foreign markets
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) In business 12 months or proven expertise No U.S. content requirement; Military sales allowable
Export Working Capital Program 90% Guarantee $5 million maximum Single project or revolver Transaction or Asset Based No pre-determined minimum ratios
Two Types of EWCP Loans EWCP Transaction Based Asset-Based
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 Advance Payment Guaranties
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 Export Order EWCP Advance Inventory Finished Goods Invoice Payment Pay Down 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 exporters 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 and bid bonds
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 Requires certification from domestic customer that goods are in fact being exported.
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)
Two Types of EWCP Loans EWCP Transaction Based Asset-Based
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% To support Standby Letters of Credit used as performance or bid bonds.
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) Exporter can provide favorable Ledger Experience with specific accounts over a significant period of time.
EWCP - Collateral Self-liquidating loan First lien on all assets being financed – Typically inventory, WIP and A/R Personal guarantees of all owners of 20% or more. Other collateral on a case-by-case basis
EWCP Fees One time guaranty fee of ¼ of 1% of the guaranteed portion for loans with a 12 month or less maturity. Deals initially booked for 12 months or less can be re- issued for ¼ of 1% the following year 55 basis point on-going fee paid by lender Business and lender negotiate Interest rate and fees (there is no restriction on the fees), lender is required to disclose this information to SBA
SBA – Ex-Im Comparison SBA and Ex-Im Bank are partners that share a goal of increasing small business exports. The programs are quite similar, yet some differences exist. Some exporters needs are better met with Ex-Im WCG, others by SBAs EWCP….
International Trade Loans (ITL) Long-term loan. $5 Million Maximum Loan 90% Guaranty $4.5 Million Maximum guaranty portion Standard 7(a) eligibility requirements, plus 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 Upgrading facilities or equipment will improve the applicant s competitive position
International Trade Loans (ITL) Standard SBA 7(a) Fee Schedule 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). ITL can be combined with a separate EWCP loan. Maximum working capital allowed is $4 million
Export Express Loans and Lines of Credit up to $500,000. Streamlined approval process Approved banks make their own credit decision, use their own forms and receive a 90% SBA guaranty up to $350,000 and 75% on loans over $350,000 to $500,000. Proceeds may be used for any export-related expense, including standby LCs when required as a bid or performance bond for an export project.
Export Express Processed using the existing SBAExpress processing procedures Eligibility: Same as SBAExpress, plus – applicant in business for at least 12 months – proceeds are to be used to develop or expand their export markets – Borrower can provide estimate of exports for next 12 months.
Export Express – Use of Proceeds Proceeds may be used for any of the following purposes: 1.obtaining a standby letter of credit when required as a bid bond, performance bond, or advance payment guarantee; 2.participation in a trade show that takes place outside the United States; 3.translation of product brochures or catalogues for use in markets outside the United States; 4.obtaining a general line of credit for export purposes; 5.performing a service contract from buyers located outside the United States;
Export Express – Use of Proceeds 6.obtaining transaction-specific financing associated with completing export orders; 7.purchasing real estate or equipment to be used in the production of goods or services for export; 8.providing term loans or other financing to enable a small business concern, including an export trading company and an export management company, to develop a market outside the United States; 9.acquiring, constructing, renovating, modernizing, improving, or expanding a production facility or equipment to be used in the United States in the production of goods or services for export; and 10.Any business expense that the lender determines will support a borrowers export development activities
Export Express Collateral Requirements The same as regular express, with one exception. – If an Export Express line of credit over $25,000 is used to support the issuance of standby letters of credit, the line of credit must have collateral (cash, cash equivalent or project) that will provide coverage for at least 25% of the issued standby letter(s) of credit amounts.
Maximum Maturities Line of Credit – 7 years Permanent Working Capital – 10 years Equipment – Useful Life Real Estate – 25 years
Resources SBA Export Business Planner Video series
Thank You! Toni Corsini, Regional Manager SBA Export Solutions Group U.S. Export Assistance Center 33 Whitehall Street, 22nd flr New York, NY –