Transcript SMALL BUSINESS ADMINISTRATION

SBA
SBA EXPORT
FINANCE
PROGRAMS
U.S. SMALL BUSINESS ADMINISTRATION
 Approximately 94% of all US businesses are
classified as “small businesses’. [NAICS]
 SBA assists small businesses by guaranteeing
bank loans up to 90% for export financing. SBA
also provides complimentary loan application
assistance and technical assistance.
 Houston’s Assets: “Energy Capital of the World”,
Texas Medical Center, NASA’s Space Center, the
Port of Houston [#1 US port in foreign tonnage],
the Houston Airport etc. have created a ripple
effect promoting global markets for area
businesses.
THREE EXPORT LOAN PROGRAMS:
http://www.sba.gov/oit
1] INTERNATIONAL TRADE (IT)
2] EXPORT WORKING
CAPITAL (EWC)
3] EXPORTEXPRESS (EE)
S.B.A. offers 75%
Guaranty:
1] INTERNATIONAL TRADE
LOAN GUARANTY (IT 75%).
Loan for Business-Related Real Estate,
Equipment, and Working Capital
[COLLATERAL MUST BE LOCATED IN THE U.S.]
INTERNATIONAL TRADE
PROGRAM (IT 75%):
 For
a business: 1] engaged or preparing to
engage in export or 2] adversely affected by
imports.
 Loan
Proceeds: To purchase, construct, renovate
fixed assets: such as office building, factory,
warehouse, export storage, and/or equipment.
 Not for refinancing or debt payment.
 Unique Requirement: Applicant must provide a
business plan supporting projected export sales.
INTERNATIONAL TRADE
PROGRAM (IT 75%):
 SBA’s
maximum guaranty exposure for a fixed
asset International Trade export loan is :
 $ 1 Million for an International Trade bank loan.
The maximum allowable loan amount is $ 2MM.
 SBA loan guaranty is up to 75%.
 Maximum loan term may be up to 25 years for
real estate and 10 years for equipment.
 All fees are controlled by SBA Regulations.
 Collateral securing the loan must be located and
used in the U.S.
U.S.S.B.A.
2] EXPORT WORKING
CAPITAL LOAN GUARANTY
PROGRAM (EWC 90%).
Collateral items purchased with loan
funds are exported out of the U.S.
EXPORT WORKING CAPITAL
PROGRAM (EWC 90%):
The #1 need of exporters:FINANCING.
EWC relieves bankers from risk exposure:
SBA may guaranty a bank loan up to
$1,000,000.00 or 90% of the loan amount,
whichever is less. Maximum bank loan
amount for this program is also $ 2 Million .
SBA can help exporters cash-in on the global
market by providing a Government guaranty
for a bank loan.
EWC (90%): What is it?
An Export Loan Program which:
Provides
short-term loan or a revolving
line of credit financing to exporters.
Encourages lenders to make export
loans almost risk free.
EX-IM BANK COUNTRY
LIMITATION SCHEDULE:
1) Schedule highlights those foreign markets
the US Govt. supports or restricts.
www.exim.gov/country/cntlimit.html
2) Refer to Schedule for any export
restrictions on buyer’s country.
3) Restrictions imposed for Political,
Economic or Legislative reasons.
EWC (90%): What does it cover?
 Pre-shipment
working capital: To purchase
raw materials for manufacturing, or
finished goods for direct or indirect export.
 Indirect
Exports: Goods sold to another U.S.
company, however, final destination of goods is
overseas.
EWC (90%): What does it cover?
 Post-shipment
exposure: extends the loan
payment term allowing the seller time to
receive sales proceeds from the buyer
and/or to complete post shipment
operations, such as installation or final
assembly, performed by US employee of
seller, in the destination country.
EWC (90%): What does it cover?
 Combination
of pre- and post- shipment
financing [ for example: manufacture
modular housing, allowing for time to
assemble overseas, and payment from
buyer].
EWC (90%): what does it
cover ? (continued)
Services on a Existing Contract: Foreign
contract for construction, engineering,
architectural etc. [loan proceeds for inventory
required to perform on contract, travel, US
payroll expenses etc.].
Standby Letter of Credit: Bank guarantees the
work performance overseas of the U.S. exporter
[similar to a Performance Bond].
EWC: Who is eligible?
The exporter must:
Must
be as U.S. citizen or have a valid
“Green Card” [must be verified with
INS].
Meet SBA’s industry size-standards .
Have been in business for at least 12
months [not necessarily in exporting].
IRS tax returns must be verified.
SIZE STANDARDS
Manufacturing ---- 500 to 1500 employees or less.
Mining
---- 500 employees or less.
Wholesale Trade ---- 100 employees or less.
By-Employees:
By-Annual Gross Receipts:
Gen. & Heavy Construction--------------$ 27. 5 million
Special Trade ----------------------------$ 11.5 million
Retail Trade
Real Estate
Services
-------------------$ 5. to $ 21.
-------------------$ 5. to $ 18.5.
---------------- $ 2. 5 to $ 21.5
-------------- $ 0.750 to $ 9.
million
million
million
Agriculture
million
North American Industry Classification System (NAICS).
EWC: What collateral will be
required to support the loan?
 Assignment
of proceeds from one or more:
Confirmed Letter of Credit.
Foreign receivables.
Service contract.
EXIM export credit insurance.
 Fixed
assets ( usually to secure long-term
loans [1 year or more] or weak credit).
 Personal guarantees by owners:( owners
with 20% or more ownership in business).
MAJOR DIFFERENCE:
EWC: What Does SBA Look For?
The Credit Focus: The transaction,
NOT the business.
Is the deal “DO-ABLE” ?
How reliable is the repayment source?
Can the exporter perform ? Does the
exporter have the expertise?
EWC: SBA Fees & Interest Rates
SBA Guarantee Fees:
Loan
term of 12 months or less:
0.25% of guaranteed loan amount.
Loan term over 12 months: regular
7a fee applies (between 1%-4%).
Interest Rates & Lender Fees:
Negotiable between lender and
customer: not controlled by SBA.
3] EXPORTEXPRESS (EE 75-85%)
•
•
•
•
•
Maximum loan amount : $ 250,000.
SBA guaranty up to 85% for $150,000 or less. For
loans from $150,000 to $250,000, SBA guaranty
75%.
Unique program where loan funds may be used to
market your goods/services overseas. In addition,
the purchase of fixed assets or working capital.
Only SBA Export program where Lender uses its
own loan application, credit, and processing
procedures. Only one SBA documents is required.
No criminal activity in personal history.
EWCP: Some limits
Purchase
of American-made
equipment and products ”to the
greatest extent practicable”.
Limited sales to foreign military
(U.S. Munitions List prohibited).
SBA follows EXIM Country
Limitation Schedule.
Helpful
Websites:
Basic Guide to Export:http://www.export.gov;
http://www.tradenet.gov;http://www.ita.gov/tic
Market research: http://www.usatrade.gov
Market Dev.& Links:http://www.usatrade.gov
http://www.buyUSA.com;Europages Business
directory: http://www.europages.com; Trade
Shows Worldwide: http://www.tscentral.com
Export Regulations:http://www.bxa.doc.gov;
ATA carnet: http://www.usib.org.
E. L. A. N.
 Export Legal Assistance Network
(E.L.A.N.) http://www.fita.org/elan
 U. S. Small Business Administration and
Federal Bar Association.
 Initial consultation is FREE.
Contact: Sameer Mohan Esq.
or Jamie Joiner Esq.
Baker & Hostetler LLP
(713) 646-1314
SBA-Sponsored FREE Export
Resource Assistance

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SBA International Trade Officer: Najla Tanous
(713) 773-6522/23: To finance existing export
orders.
University of Houston S.B.D.C. Roberta Skebo
(713) 752-8400 : Free loan packaging for an SBA
export loan application.
SCORE - Business Information Center (BIC),
(713) 773-6549: Start-up information to export.
S.B.D.C. International Trade Center
Carlos
Lopez, Director, for technical assistance.