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Specifically Designed Small Business Loans For Exporting Companies |
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If you own an export company and are looking for a small business loans, another option you may not be aware of is the Special Purpose Small Business Loans offered by the Small Business
Administration. Rather than competing for small business loans against many
other business owners (or potential small business owners), it would be to your advantage to apply for a Special Purpose Loan Export Working Capital Small Business Loans The Small Business Administration offers a small business loans targeted specifically for export companies in the United States. The SBA offers the Export Working Capital Program (EWCP), which helps small businesses gain short-term working capital to exporting companies. The SBA's Export Working Capital Program will help small exporting companies attain working capital when funds are not available through more reasonable terms. Lenders are encouraged by the SBA to offer export companies with working small business loans by guaranteeing up to $1.5 million or up to 90% of total working small business loans amount, whichever amount is less. These small business loans can be used for a single exporting transaction, used on a revolving basis, or for multiple sales. Types of Small Business Loans for Exporting Companies While several types of small business loans are available for all small businesses, but there is one targeted specifically toward export companies: Microloan or 7 (a) Loan program. The Microloan or 7(a) Loan is available to applicants that have been in business for at least one full year (although not necessarily in exporting for a full year), and export management or export-trading companies may also apply to this program. Under this program, the SBA makes funds available to nonprofit community-based lenders (intermediaries), which, in turn, make loans up to a maximum of $35,000 to eligible export companies; the average small business loans size is about $10,500. Applications are submitted to the local intermediary and all credit decisions are made on the local level. The maximum term allowed for 7 (a) small business loans is six years; however, loan terms vary according to the size of the loan, the planned use of funds, the requirements of the intermediary lender, and the needs of the small business borrower. Interest rates vary, depending on the intermediary lender and costs to the intermediary from the U.S. Treasury. Each intermediary lender has its own lending and credit requirements, but export trading companies contemplating an application for a 7 (a) loan should be aware that intermediaries will generally require some type of collateral and the personal guarantee of the owner. Each intermediary is required to provide business-based training and technical assistance to its small business loans borrowers. Individuals and small businesses applying for 7 (a) loan program financing may be required to fulfill training and/or planning requirements before a loan application is considered. Eligibility requirements for the Microloan or 7(a) Loan and all other SBA small business loans are formally written, however ultimately the SBA will make final decisions. Typically, qualifications are determined by the type of business, the intended purpose of the money loaned, the size and profitability of the business, and funds available from other sources. What The Maximum 7(A) Small Business Loans Can Be Used For The guidelines of the small business loans clearly define what the funds can and cannot be used for. While this may seem rigid, the SBA must do everything possible to ensure all recipients of this loan will be the best choice for the program. Funds made available through the EWCP program must only be used for the financing of the working capital needs associated with a single or even multiple transactions of the exporting company. The EWCP money cannot be used for the procurement of export marketing advice or services, foreign business-related travel, to repay existing debts, or to participate in trade shows or exhibitions. All applicants to this program must be able to show how the proceeds of this loan will be essential to the expansion of an existing export market, or to develop a new export market. Also, the applicant must be able to prove that they are negatively impacted by import competition, and are willing, able and committed to making necessary improvements to put them in a more competitive position. Or, the small business loans applicant must be able to provide the SBA with a business plan that projects enough profits to repay the small business loans debt. |
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