How can companies secure financing for export initiatives?

The practice of sales of products or services is becoming more global by the day, and Florida companies have taken note. From service providers to manufacturers, more and more companies are seeking export advice and reaching to the Florida SBDC at University of South Florida for export assistance and consultation.

Beyond the considerations of “internationalizing” the product or service, finding the proper foreign markets, and learning about tariffs and freight, company owners and managers are often faced with an all-common challenge. It’s hard enough to get financing for domestic operations. How can the company finance an export initiative?

Javier Marin is a. Marin does financial analysis and provides guidance through the process of acquiring financing for domestic and export operations.

According to Javier Marin, Certified Global Business Professional (CGBP) and financial business consultant with the FSBDC at USF, banks look at working capital export financing as one of the riskiest credit deals simply because the collateral is beyond the confines of US territories and highly unlikely to be liquidated in case of loan default.

“Banks want to help their clients, but the primary premise behind extending financing to a client, form a bank’s perspective, is that the loan will be repaid and that there is recourse if it’s not,” Marin, a 21 year veteran of the banking industry said.

Marin adds that a combination of programs by the Export-Import Bank of the United States (EXIM) and the Small Business Administration (SBA) provides loan guarantees to banks who want to consider extending credit to businesses contemplating starting or expanding export activities and have been in business between 12 and 36 months, depending on the program.

For financing up to $500,000, the SBA Export Express program provides the lenders with guarantees for credit extension to qualified businesses for export development; export transactions; standby letters of credit and or fixed asset acquisitions. EXIM’s Global Credit Express provides short-term direct financing for general export activities or specific export transactions.

According to Marin, the SBA’s CAPLines and Export Working Capital Program (EWCP) loans can go up to $5 million and may be used for working capital purposes to cover production costs (inventory, labor, materials, etc.) as well as freight costs and insurance on freight and foreign accounts receivable. Other allowable expenses under the CAPLine and EWCP include letters of credit to guarantee performance, bids or advance payments.

The EXIM Bank also provides a Working Capital Guarantee Program for similar purposes but for requests over $5 million.