# Presentation: 212695

##  “Mission InternationalStage 1: South America”February 29, 2008Stonewall Jackson Resort, West Virginia

**Patrick Hayes, Regional Export Finance Manager**
**U.S. Small Business Administration**
**U.S. Export Assistance Center**
**Cleveland, Ohio**
**pat.hayes@mail.doc.gov – 216-522-4731**

## MythSmall Businesses Don’t Export

_**Fact**_
- Very small companies (fewer than 20 employees) account for 70 percent of all exporting firms.
- The share of U.S. merchandise exports accounted for by small and medium-sized enterprises (SMEs) has remained around 30 percent.

## www.sba.gov/oit

## Trade Finance

- Finding the right mix for _your_ Company of:
- Payment assurance
- Workable cash flow
- Winning customers – increasing sales

## Old Model

- The U.S. market was so big that when  business did export, restrictive payment terms were the norm.

## New Model

- Evolving.
- Hyper Competitive.
- Financing is a _major decision_ factor for your foreign buyers.
- Consider evolution of U.S. automotive and furniture dealers.
- Cash flow implications.

## SBA Loan Programs for Exporters

- Export Working Capital Program
- International Trade Loan
- Export Express

## EWCP “Philosophy”

***“******A business should not lose a viable export sale due to a lack of capital”***

## Export Working Capital Program

- 90% Guarantee
- $1.5 Million is maximum SBA guaranteed portion
- SBA-Ex-IM Co-guarantee
- Transaction financing
- No pre-determined minimum ratios
- Single Project or Revolver
- Quick turnaround time
- Preliminary commitment availability

## EWCP Fees

- One time guaranty fee of 1/4 of 1% of the guaranteed portion for loans with less than a 12 month maturity.  Loans with a  12 - 36 month maturity have a fee  between 2% and 3.5%
- 49.5 basis point on-going fee paid by lender
- Business and lender negotiate Interest rate and fees, lender is required to disclose this information to SBA

## EWCP - How to Apply

- Apply with a commercial loan officer at your existing bank.   The Bank will forward your application to SBA for approval if SBA support is needed for the transaction.
- Apply directly to SBA for a Preliminary Commitment (PC), SBA’s conditional loan approval.  Applicant has 60 days to find a lender willing to participate in the transaction.

## Key Finance Ratios

|  | Brazil | Chile | Columbia | Peru |
| --- | --- | --- | --- | --- |
| D&B Rating | 3b | 2a | 4b | 3c |
| 2007 GDP Growth (Est) | 4.8% | 5.8% | 6.3% | 8.1% |
| Ex-Im Bank Cover | Full cover available | Full cover available | Full cover available | Restricted cover available |
| Import Cover | 7.5 Months | 5.8 Months | 6.8 Months | 10.0 |
| Recommended Terms | LC | SD | LC | LC |
| Usual Terms | 60-90 days | 30-60days | 30-90 days | 30-60 days |

- Source: D & B

##  Discounted Credit Insurance

- The Export-Import Bank of the United States (Ex-Im Bank) and the SBA have joined together to provide SBA export loan recipients with a 25% discount on export credit insurance premiums.
- Ex-Im Bank’s export credit insurance protects your company against nonpayment and enables you to sell on competitive “open account” terms.  You can enter new markets and increase sales in existing markets and have the ability to match the credit terms offered by your foreign competitors.
- Ex-Im Bank provides up to 95% coverage for both commercial risks (i.e. buyer insolvency and default) and political risks (I.e. war, revolution and the cancellation of an export or import license).

## Export Assistance Partners

- Ex-Im Bank
- Sharyn KoenigSr. Business Development Officer(212) 809-2653

## International Trade Loan (IT)

- The SBA guarantee portion can go as high as $1.75 Million for IT loan customers. eligibility requirements:
- 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
- Upgrading facilities or equipment will improve the applicant’s competitive position

## International Trade Loans

- Use of Proceeds is limited to:
- facilities
- Equipment
- Debt refinancing is allowed
- Business plan/application must document eligibility requirements (i.e. export projections or evidence of adverse impact).

## International Trade Loans - How to Apply

- Apply directly with a commercial loan officer at your existing bank of account.  Application must include projections that will demonstrate increased export sales and activity as a result of the loan.

## Export Express

- Loans and Lines of Credit under $250,000.
- Banks that are currently authorized under the SBAExpress program are automatically approved for Export Express.
- Approved banks make their own credit decision, use their own forms and receive up to an 85% guarantee from the SBA.

## Export Express

- The maximum loan amount under SBA Export Express is $250,000.
- Processed using the existing SBAExpress processing procedures
- Eligibility:
- applicant in business for at least 12 months
- proceeds are to be used to develop or expand their export markets

## Export Express

- Proceeds may be used for any of the following purposes:
- transaction-specific financing of export deals, including standby letters of credit
- general lines of credit for export purposes
- export development activities such as brochure translation or participation in a trade mission
- term loans for permanent working capital, machinery and equipment, or real estate

## E-Mail Distribution List

- The SBA at the Cleveland USEAC periodically distributes information regarding developments in SBA’s international programs.  Please drop off a business card or e-mail address to be included on this list.

## www.sba.gov/oit

**www.sba.gov/oit**

**Notes:**
In summary—Small business is BIG BUSINESS, and you should know that your interests—in both domestic and international markets, is VERY WELL represented by the US Small Business Administration and from our sister agencies in the Trade Promotion Coordinating Committee (TPCC.)

Thank you.