Presentation on theme: "SBA EXPORT LOAN PROGRAMS"— Presentation transcript:
1 SBA EXPORT LOAN PROGRAMS Toni Corsini, Regional ManagerSBA Export Solutions GroupU.S. Export Assistance Center33 Whitehall Street, 22nd flrNew York, N Y –
2 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 ObamaState of the Union AddressJanuary 27, 2010
3 National Export Initiative Double Exports in five yearsExpand U.S. government’s export promotion efforts (Trade Promotion Coordination Committee (TPCC) consisting of 19 agenciesProvide access to creditEliminate barriers that prevent open and fair access to foreign markets
4 Export Working Capital Program Eligibility Company meets SBA size standardsBased on NAICS or Alternative Size StandardNAICS -Manufacturing: under 500 employeescan be as high as 1,500 employeesAlternative 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 expertiseNo U.S. content requirement; Military sales allowable
5 Export Working Capital Program 90% Guarantee$5 million maximumSingle project or revolverTransaction or Asset BasedNo pre-determined minimum ratios
6 Two Types of EWCP LoansEWCPTransaction BasedAsset-Based
7 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 BondsPerformance BondsAdvance Payment Guaranties
8 Transaction Based EWCP Self Liquidating Line of Credit Export OrderEWCP AdvanceInventoryFinishedGoodsInvoicePaymentPay DownEWCPTransaction 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
9 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 exporter’s 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
10 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 financingManufacturers using an Export Trading CompanySuppliers to other domestic manufacturersRequires certification from domestic customer that goods are in fact being exported.
11 Transaction Based EWCP Payment methods Transaction evidenced by Purchase Order, L/C or signed contractAcceptable payment by foreign buyerCash in AdvanceLetter of CreditDocumentary CollectionsOpen Account (insured)Open Account (no insurance)
12 Two Types of EWCP LoansEWCPTransaction BasedAsset-Based
13 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.
14 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.
15 EWCP - Collateral Self-liquidating loan First lien on all assets being financedTypically inventory, WIP and A/RPersonal guarantees of all owners of 20% or more.Other collateral on a case-by-case basis
16 EWCP FeesOne 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 year55 basis point on-going fee paid by lenderBusiness and lender negotiate Interest rate and fees (there is no restriction on the fees), lender is required to disclose this information to SBA
17 SBA – Ex-Im ComparisonSBA 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 exporter’s needs are better met with Ex-Im WCG, others by SBA’s EWCP….
18 International Trade Loans (ITL) Long-term loan.$5 Million Maximum Loan90% Guaranty$4.5 Million Maximum guaranty portionStandard 7(a) eligibility requirements , plusThe loan proceeds will significantly expand an existing export market or develop new export markets; orThe applicant business has been adversely affected by import competitionANDUpgrading facilities or equipment will improve the applicant’s competitive position
19 International Trade Loans (ITL) Standard SBA 7(a) Fee ScheduleUse of Proceeds :FacilitiesEquipmentWorking CapitalDebt 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
20 Export Express Loans and Lines of Credit up to $500,000. Streamlined approval processApproved 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.
21 Export ExpressProcessed using the existing SBAExpress processing proceduresEligibility: Same as SBAExpress, plusapplicant in business for at least 12 monthsproceeds are to be used to develop or expand their export marketsBorrower can provide estimate of exports for next 12 months.
22 Export Express – Use of Proceeds Proceeds may be used for any of the following purposes:obtaining a standby letter of credit when required as a bid bond, performance bond, or advance payment guarantee;participation in a trade show that takes place outside the United States;translation of product brochures or catalogues for use in markets outside the United States;obtaining a general line of credit for export purposes;performing a service contract from buyers located outside the United States;
23 Export Express – Use of Proceeds obtaining transaction-specific financing associated with completing export orders;purchasing real estate or equipment to be used in the production of goods or services for export;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;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; andAny business expense that the lender determines will support a borrower’s export development activities
24 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.
25 Maximum Maturities Line of Credit – 7 years Permanent Working Capital – 10 yearsEquipment – Useful LifeReal Estate – 25 years
26 Resources SBA Export Business Planner Video series
27 Thank You! Toni Corsini, Regional Manager SBA Export Solutions Group U.S. Export Assistance Center33 Whitehall Street, 22nd flrNew York, NY –