The U.S. Small Business Administration (SBA) guarantees an assortment of loans for different business purposes, and the International Trade Loan (ITL) may be perceived by many as a loan that can only be obtained by companies whose goal is to export goods or services. However, one of the most significant purposes of the ITL is to help companies onshore, reshore, homeshore, backshore, inshore, or as many would like to call it, repatriate manufacturing. I like to call it onshoring.
More important than what we want to call it, is the fact that we need to start seeing more, “Made in the USA” labels attached to products we buy. Articles have been written about bringing manufacturing back to the US, including Why U.S. Manufacturing Is Poised for a Comeback (Maybe) from the Wall Street Journal and Why It’s Time to Bring Manufacturing Back Home to the U.S. from Forbes.
Beyond the media and the SBA, a government agency, the private sector has also jumped onboard the “Made in the USA” logo, as reported in “Walmart Partners With Group To Offer Reshoring Assistance” where its reported that the retail giant is committing to purchase $250 billion worth of “products that support U.S. jobs by 2023.”
Onshoring manufacturing with the purpose of countering the effect of imported goods will offer increased sales for the manufacturers and also the advantage of higher quality products to U.S. consumers. This is one of the qualifying loan purposes of the ITL, as long as the company can prove damages as a result of import competition. Onshoring operations may also include bringing back your production line and manufacturing goods in the USA instead of buying goods from overseas to export or sell locally.
The International Trade Loan may be used to purchase facilities and/ or equipment that will be used to onshore production, including expansion, modernization, purchase, or construction to accommodate the onshoring activities. The real estate or equipment may be used as collateral. Those business owners who may have already borrowed funds for this purpose may still take advantage of ITL for refinancing or debt restructuring as long as the new terms are beneficial to the borrower.
The SBA lender requires a solid business plan, including financial projections and supporting documentation, to process the International Trade Loan application. Under the ITL, the manufacturer may borrow up to $4.5 million with an SBA guarantee up to 90 percent. The loan term is 10 years for equipment and/or working capital and up to 25 years for real estate.
Manufacturing had a prominent place in American industry for many years, and it’s time for local small businesses to take advantage of the opportunities available to bring production back home.
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