1. International Trade and Exporting Carlos Sosa Regional Manager, SBA - Office of International Trade

2. Federal Agency Committed to Financing Exports The Small Business Administration since 1953 Financing small U.S. exporters since the 1980s

3. Export Financing Programs 3 primary export financing programs consisting of guarantees Why is this important: * 97% of all exporters are small businesses * 96% of all customers reside outside the U.S. ##

4. Export Express Loans and Lines of Credit under $500,000. Banks that are currently authorized to book Export Express loans do not need prior SBA approval. Approved banks make their own credit decision, use their own forms and receive a either 90% guarantee (up to $350,000) or a 75% guarantee (from $350,001 to $500,000).

5. Export Express Uses Proceeds can be used by small companies for any legitimate business purpose looking to develop or expand their export markets, such as: participation in trade show, transaction financing, gold key purchase, inventory build up, equipment purchase, real estate purchase or improvement, etc. Revolving line of credit from 1 to 7 years or a term loan up to 25 years.

6. Export Express Eligibility: Similar to Regular Express  Company in business for at least 12 months  Requirement of Personal Guarantee  Proceeds are not financing offshore operations  No shipment to restricted countries A MUST: Provide an estimate of first year export sales

7. Export Express Fees One time fees of ¼ of 1.0% of the guaranteed portion for loans with less than a 12 month maturity. Guarantee fee on loans with a maturity in excess of 12 months between 2% and 3.75% of the guaranteed portion. 0.55% on-going fee paid by lender. Exporter and Lender negotiate interest rate.

8. Export Express Application Process Q: How does an exporter apply for an Export Express credit facility? A: Through its local community bank or commercial bank.

9. Exporter finally receives the large export contract… what now? How does exporter finance the Pre –Export Financing to fill that contract? -

10. Pre-Export Financing Pre Export Financing is the Working Capital needed to manufacture goods or purchase inventory for export sales Pre-Export Financing= Working Capital= Foreign Purchase Order Financing Is there a problem with Pre-Export Financing? #

11. Why are banks reluctant to provide pre-export financing facilities? The Collateral Issue. Foreign A/R are not considered true collateral—very difficult to perfect a security interest in a foreign country. Commercial L/Cs are also not viewed as tangible collateral. #

12. SBA Answer:The Export Working Capital Program (EWCP) 90% Guarantee Works as a true Foreign Purchase Order Financing line of credit. A $ 5 million loan cap.

13. Can be booked as an Asset Based Revolving Line of Credit (Purchase Order Financing) or Transaction Specific Based Facility (Foreign A/R and Foreign Inventory Financing). No minimum U.S. content requirement. SBA Answer:The Export Working Capital Guarantee Program

14. What costs can be financed? Raw materials Foreign A/R & Foreign (bound) Inventory Overall work in process Issuance of Standby Letters of Credit i.e. Performance Bonds and Bid Bonds (no warranties)

15. What Types of Goods can be Exported? Capital Equipment Commodities Non-Durable Goods Technological Goods Services Military type goods and goods sold to foreign militaries are acceptable (but require State Department approval)

16. Remember This is a Pre-Export Financing Program Reasonable Assurance of Payment from foreign buyer via: Export LCs If open account, Export Credit Insurance Exceptionally, open account w/o credit insurance based upon excellent ledger history

17. 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.

18. Exporter Eligibility Requirements Company meets SBA size standards  Based on NAICS  Manufacturing: under 500 employees o can be as high as 1,500 employees Product is titled and shipped from U.S. (SED) In business 12 months or proven expertise

19. Exporter Eligibility Requirements Personal guarantees of principal owners. Other SBA eligibility provisions  Criminal history, previous loss to govt. etc.

20. EWCP - Collateral Self-liquidating loan First lien on all assets being financed – Typically foreign bound (export) inventory, WIP and foreign A/R Other collateral on a case-by-case basis

21. EWCP Fees Guarantee fee of ¼ of 1.0% of the guaranteed portion for loans with a term of 12 months or less Guarantee fee on loans with a maturity between 2 to 3 years, between 2% and 3.75% of guaranteed portion. 0.55% on going fee paid by lender Exporter & lender negotiate rate & fees (lender required to disclose this info to SBA)

22. EWCP Application Process Q: How does an exporter apply for an EWCP credit facility? A: Through its local community bank or commercial bank.

23. International Trade Loan (ITL) Jobs Act changes: 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  Upgrading facilities or equipment will improve the applicant ’ s competitive position

24. 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). ITL can be combined with a separate EWCP loan. Maximum working capital allowed is $4 million

25. International Trade Loans (ITL) How to Apply International Trade Loans can be approved PLP or through normal 7(a) processing. ##

26. Conclusion There is help to make the export transaction a safe and profitable business venture.

27. Contact Information Carlos Sosa Regional Manager Office of International Trade (OIT) Minneapolis, MN Carlos.Sosa@sba.gov (612) 348-1642 Visit: www.sba.gov/international for more information on taking your business globally.www.sba.gov/international

28. Contact Information Charles Shortridge District International Trade Officer 100 N. Sixth Street, 210-C Butler Square Minneapolis, MN 55403 Tel: 612- 370-2324, email: charles.shortridge@sba.gov