1. “Resources for Export Markets” SME Conference 2014 Embassy of Malaysia October 15, 2014 Dennis R. Chrisbaum Director, International Trade Finance U.S. Small Business Administration Washington, D.C.

2. Exporters Questions 1)How do I get paid? 2)How can I reduce my payment risk? 3)Are funds available to help me explore international markets? 4)How can I finance my export transactions? 5)How can I finance my business expansion?

3. International Methods of Payments: Their Impact on Financing Needs 1. Who sets the method of payment? 2. Competitive pressures, customer relations, regional preferences and, sometimes, regulations 3. Method of payment will determine the financing needed for a transaction

4. Financing Export Development & Orders Pre-Order Pre-shipment Shipment Post-Shipment PERFORMANCE RISK FINANCIAL RISK Trade ShowsProduction costs Receivables CertificationsMaterial financing TranslationsLabor Product adjustments Packaging Buyer financing Bid BondsPerformance bonds

5. What Might an SME Exporter Need? Working Capital for Export Development: Attend trade shows Secure CE mark, international patent or trademark Meet potential business partners Vet potential buyers, agents or distributors and purchase foreign credit reports In-country promotions Translation of website/product literature and other marketing costs

6. Profile: to $350,000 with 90% guaranty $500,000 with 75% guaranty Processed by SBA-approved Export Express lenders Working capital: 7 years; Fix assets: up to 25 years Required: Entering or expanding in foreign market In business for at least 12 months (can be waived by lender if the applicant’s key personnel have export expertise and successful business experience and lender does conventional underwriting, not relying on credit scoring) Solution: SBA Export Express

7. Proceeds may be used for any “export development activity,” such as: 1) export development including participation in a foreign trade show or translation services, 2) export transactions, including export purchase orders and foreign accounts receivables; 3) issuance of standby letters of credit that serve as performance bonds, completion bonds, and advance payment guarantees, and 4) fixed assets for equipment or real estate. Solution: SBA Export Express

8. Working Capital to Produce Export Orders: Inventory, materials, labor, other production costs Foreign accounts receivable insurance Insurance and freight costs Bank fees related to the transactions Standby-letters of credit to guarantee bid, performance, or advance payments What Might an SME Exporter Need?

9. Solution: CAPLine Working Capital Line of Credit Loan guarantee for 85% on lines of credit up to $150,000, and 75% of higher amounts up to $5,000,000. Small businesses may use the lines to provide credit terms to customers and to finance inventory. Advantage to businesses and lenders: Small business borrowers can pledge both domestic and foreign accounts receivable and inventory using one line of credit. Foreign accounts receivable must be covered by credit insurance. Guarantee is available for manufacturers, wholesalers, export trading companies, and service providers.

10. Solution: Export Working Capital Program - EWCP 90% guarantee on loans/lines of credit up to $5,000,000 For small businesses that can generate export sales and need additional working capital. Must be used for export transactions only, including 100% of exporter’s costs of the transaction from purchase order to collections; can fund the entire transaction cycle Can be structured to fund: – single or multiple transactions or – as an asset-based line of credit with advances made against a borrowing base of export inventory and foreign accounts receivable.

11. Export Working Capital Program Advance rates:  75% against inventory, WIP  up to 90% again insured A/R SBA:  no US content requirement  no prohibition on military sales  only Small Business applicants  Guaranty fee: ¼ of 1% on guaranteed amount, 12 months Exim Bank:  51% US content, no military sales, any size applicant

12. Bid & Performance Bonds; Advance Payment Guarantees Standby letters of credit issued by a commercial bank can serve as a performance or bid bond or as an advance payment guaranty. Funding support for Standby Letters of Credit can be provided by the following guaranty loan programs: Export Express Export Working Capital Guarantee – EWCP (SBA) Working Capital Guarantee Program (Exim Bank) The guarantee serves as an incentive to the bank to issue the standby letter of credit with less than full, 100% cash collateral.

13. 1.SBA Export Express—to $500,000 Guaranteed loan 7 years maximum working capital 2. Ex-Im Bank’s Global Credit Express—to $500,000 Direct loan, if credit is not available elsewhere Six month or 12 month term 3. SBA’s Working Capital CAPLine—to $5 million One line to support domestic and foreign sales Ten year maximum 4. SBA’s Export Working Capital—to $5 million Exim Bank’s Working Capital—over $5 million Guaranteed loan, export transactions only Usually for 1 year, 3 year maximum Export Working Capital Solutions

14. Term Loan for fixed assets: Machinery or equipment to expand production in order to meet foreign demand Retooling expenses necessary for metric production or to meet other standards Permanent working capital Real estate needed as a result of expanding export sales What Might an Experienced Exporter Need?

15. International Trade Loan A loan guarantee for 90% of a term loan up to $5,000,000 To acquire, construct, renovate, modernize, improve, or expand facilities and equipment in the United States to produce goods or services involved in international trade. Eligible borrowers are in a position to expand existing export markets or develop new ones. May also be used by a U.S. company that has been adversely affected by import competition and require financing to modernize or improve operations to become more competitive. Maximum term: ten years for working capital; 25 years for real estate acquisition. May be used for on-shoring production, if also expanding exports

16. Small Business Definition Manufacturers (<500 employees generally; can go as high as 1,500); Wholesalers, including export trading companies (<100 employees); Services companies are eligible based on annual sales ($7.0 million to $35.5 million); Or applicant can use the Alternative Size Standard: a firm with less than an average of $5 million in net income for the past two years and a net worth less than $15 million.

17. Indirect Exports Note: Both SBA and Exim Bank export loans can support “indirect exports.” Indirect exports occur when the borrower ships a product to another domestic company that in turn incorporates it into a final product for export or to an export trading company that exports it directly. Documentation must be provided by the exporter-of-record to the lender that the borrower’s product is, in fact, being exported.

19. SBA’s Network of Trade Finance Specialists at U.S. Export Assistance Centers CHARLOTTE Territory: North Carolina, South Carolina, Eastern Tennessee Dan HoltDan Holt 704-333-4886 x226 CHICAGO Territory: Wisconsin, Illinois, Iowa John NevellJohn Nevell 312-353-8065 CLEVELAND Territory: Ohio, Western New York, Western Pennsylvania, Patrick HayesPatrick Hayes 216-522-4731 DALLAS/FORT WORTH Territory: Texas, Oklahoma Rick SchulzeRick Schulze 817-684-5506 DENVER Territory: Colorado, New Mexico, Utah, Wyoming Bryson PattersonBryson Patterson 303-844-6622 DETROIT Territory: Michigan, Indiana John O'GaraJohn O'Gara 313-872-6793 MIAMI Territory: Florida, Puerto Rico, Virgin Islands Mary HernandezMary Hernandez 305-526-7425 ext. 21 ATLANTA Territory: Georgia, Alabama, Kentucky, West/Central Tennessee Sandro MurtasSandro Murtas 404-815-1496 ARLINGTON, VA Territory: Virginia, Maryland, District of Columbia, West Virginia, Delaware William HouckWilliam Houck 202-557.4063 BOSTON Territory: Maine, Vermont, New Hampshire, Massachusetts, Connecticut, Rhode Island John JoyceJohn Joyce 617-565-4305 CALIFORNIA IRVINE Territory: Southern California, Nevada Martin Selander 949.660-8935Martin Selander LOS ANGELES Territory: Southern California, Arizona Pellson Lau 213-894-8267 SAN FRANCISCO Territory: Northern California – Bakersfield to the Oregon border, Hawaii, Guam Jeff Deiss – 415-744-7730 MINNEAPOLIS Territory: Minnesota, North Dakota, South Dakota Carlos SosaCarlos Sosa 612-348-1642 NEW ORLEANS- Louisiana, Arkansas, Mississippi Reginald Harley 504-589-6730 NEW YORK CITY Territory: New York City & 5 Boroughs, Eastern Upstate New York, New Jersey Toni Corsini Toni Corsini 212-809-2645 PHILADELPHIA Territory: Eastern Pennsylvania Robert ElsasRobert Elsas 215-597-6110 SEATTLE Territory: Washington, Alaska, Oregon, Idaho Sandra Edwards 206-553-0051 ex.228 ST. LOUIS Territory: Kansas, Missouri, Nebraska John BlumJohn Blum 314-260-3788

20. Questions? Thank You! Dennis R. Chrisbaum, SBA Dennis.Chrisbaum@sba.gov Tel: 202.205.6885 www.sba.gov/international