Financing your global business How SBA promotes access to capital - - PowerPoint PPT Presentation

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Financing your global business How SBA promotes access to capital - - PowerPoint PPT Presentation

Mar 22, 2023 306 likes •466 views

Financing your global business How SBA promotes access to capital for US exporters Jeff Deiss US Small Business Administration Office of International Trade San Francisco, CA Office of International Trade www.sba.gov/oit Financing for the

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Financing your global business

How SBA promotes access to capital for US exporters

Jeff Deiss

US Small Business Administration Office of International Trade San Francisco, CA

Office of International Trade – www.sba.gov/oit
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Financing for the exporter

What do you need to get the deal done?

Office of International Trade – www.sba.gov/oit
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Two types of financing that an exporter needs

  • 1. To fulfill export orders – working capital – for

production and pre-shipment costs (raw materials, inventory, labor, etc.); post-shipment carrying costs (assuring sufficient cash flow while offering competitive terms)

  • 2. To position the firm for export success –

fixed assets, equipment, permanent working capital, debt restructuring – to improve competitive position and

be more efficient

Office of International Trade – www.sba.gov/oit
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SBA works with lenders to unlock both kinds of financing. How? With loan guarantees for commercial lenders. Find active lenders at: www.sba.gov/international -> select Export Loans -> select Export Lenders

Office of International Trade – www.sba.gov/oit
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SBA assistance is limited to ”small businesses”

  • What is a “small” business?
  • SBA’s traditional small business definition defines small

businesses by NAICS code:

Office of International Trade – www.sba.gov/oit

Industry Category Small Business Size Standard Ag producers $750,000/year revenue Ag product wholesalers 100 employees Food retailers $7.5 MM/year revenue Food processors 500 employees

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SBA assistance is limited to ”small businesses”

  • But there is also an “Alternate Size Standard”:
  • Tangible net worth of ≤ $15 million, and
  • 2-year average NET income after taxes (excluding carryover

losses) of ≤ $5 million

  • So small business can actually be pretty BIG...
Office of International Trade – www.sba.gov/oit
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SBA’s 3 Export Programs

Specialized 7(a) loans for financing your exporter:

  • 1. International Trade Loan (ITL)
  • Positioning the firm to export
  • 2. Export Working Capital Program (EWCP)
  • Fulfilling export orders
  • 3. Export Express
  • Smaller loans for either need
Office of International Trade – www.sba.gov/oit
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SBA Export Lending

The highest % guarantee – the Export BOOST!

Office of International Trade – www.sba.gov/oit
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The “EXPORT BOOST”

  • Typical federal (including SBA) loan guarantees range

from 50% to 75%

  • SBA export loans receive:

90%

  • Why? Because exports are critical to national

economic success

Office of International Trade – www.sba.gov/oit
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SBA’s export financing programs #1

International Trade Loan (ITL)

“Positioning the firm for export”

– 90% guarantees on loans up to $5 million – Equipment, real estate, refinancing, permanent working capital (No transfers of ownership) – Financing for projects that improve the competitive position of US exporter so as to increase exporting – Term loan: RE - 25 yrs; M&E or WC - 10 yrs – FY2015: $390MM, 215 loans, 81 lenders

Office of International Trade – www.sba.gov/oit
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SBA’s export financing programs #2

Export Working Capital Program (EWCP)

“Working capital to fulfill the export order”

– 90% guarantees on loans up to $5 million – Only export working capital (or standby letters of credit) – Asset-Based or Transaction-Based lines; revolving – Advance rates of 75-90% on export sales – SBA’s lowest guaranty fee (¼%) – Typically 1 year loans; re-issued annually – FY2015: $310MM, 176 loans, 79 lenders

Office of International Trade – www.sba.gov/oit
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SBA’s export financing programs #3

Export Express

“Fast-track approvals for smaller export-related loans”

– 90% guarantees on loans up to $350,000

– 75% guarantees on loans up to $500,000

– Use lender’s own underwriting/collateral standards – Any “export development activity” – fixed assets; market development; refinancing; general line of credit if at least 70% will be export-related – Term loan or revolving line – FY2015: $30MM, 156 loans, 62 lenders

Office of International Trade – www.sba.gov/oit
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BONUS program:

  • State Trade & Export Promotion (STEP) Program

– Grant program run by California Centers for International Trade Development (CITD) – www.californiastep.org – Typically $2,500 grant to reimburse small businesses for the cost of trade shows and other export development work – Funds from SBA’s State Trade & Export Program (STEP) – California was awarded a $740,000 grant for FY2016

Office of International Trade – www.sba.gov/oit
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Export Finance Assistance

Jeff Deiss

jeff.deiss@sba.gov 415-744-7730

Regional Export Finance Manager, SBA, San Francisco

www.sba.gov/international

Office of International Trade – www.sba.gov/oit
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…and finally an export marketing benefit for everyone:

The Strong US Dollar

Marketing friend/pricing foe

Office of International Trade – www.sba.gov/oit