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How to Finance Your Small Business Exports, Foreign Investments and Projects

How to Finance Your Small Business Exports, Foreign Investments and Projects

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Published by Santiago Cueto
This is a chart of How to Finance Your Small Business Exports, Foreign Investments and Projects
This is a chart of How to Finance Your Small Business Exports, Foreign Investments and Projects

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Categories:Types, Business/Law
Published by: Santiago Cueto on Jan 16, 2013
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11/23/2014

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Many small businesses think they are too small to compete in the world market. In fact, 97 percent of all exporters are small businesses.The federal government has loans, insurance and grant programs to help you become an exporter or expand your exporting business.
FINANCING YOUR SMALL BUSINESS EXPORTS,FOREIGN INVESTMENTS OR PROJECTS
(Information current as of July 2010)
Financing Your Small Business Exports
Program DescriptionWhat Can I Use it For?How Much Can I Borrow?How Will I Beneft?Where Can I GetMore Inormation?
Export Development and Working Capital Loans
—help rms expand overseas and fund export transaction costs or nancing for the export of goods or services by providing theliquidity needed to accept new orders, enter new markets and compete more effectively in the international marketplace. The Export Express loan programprovides working capital and or xedasset nancing for companies that willbegin or expand exporting.Export transactions, including supportfor standby letters of credit; exportdevelopment expenses, includingparticipation at trade shows, andtranslating product literature.$250,000 maximum. Terms up to 25years for xed assets and up to 7 yearsfor working capital.Maximize exibility to meetexporting needs.U.S. Small Business Administrationwww.sba.gov The Export Working Capital Programprovides nancing to support exportorders or the export transaction cycle,from purchase order to nal payment.Raw materials, inventory, labor,and the resulting foreign accountsreceivable; overhead costs incurred tofulll an export sales order.$1.66 million with a 90% SBA guarantyprovided to the lender.$2 million under a co-guarantyagreement with the U.S. Export-ImportBank.Frees up other lines of credit fordomestic use. 100% percentnancing of export-relatedcosts.U.S. Small Business Administrationwww.sba.gov The Working Capital Guarantee Programprovides a 90% guarantee to a lenderthat makes a loan to an exporter for thepurchase and or manufacture of U.S.goods and services for export. To purchase raw materials or nishedgoods to fulll export sales orders.May be transaction-specic orrevolving.No maximum and no minimum amount;loan amount depends on the exporter’sability to service the debt as evidencedby the borrower’s nancial statements,tax returns and owner’s personalguarantee.Uses export inventory andforeign inventory receivables ascollateral.Export-Import Bank of the U.S.www.exim.gov
Facilities Development Financing
—loans to acquire, construct, renovate, modernize, improve or expand facilities and equipment used in the U.S. to produce goods or services forexport. The International Trade Loan Programprovides long-term nancing to supportcompanies that are expanding becauseof growing export sales or have beenadversely impacted by imports and needto modernize to meet foreign competition.Fixed assets for construction, building,real estate equipment. Working capitalfor export transactions. Total SBA guaranty up to $1.75 millionwhen combining a term loan with anExport Working Capital loan. Terms upto 25 years for xed assets. Maximumworking capital loan is limited to $1.25million and a three-year maturity.Meet xed asset andtransactional nancing needswith one loan program.U.S. Small Business Administrationwww.sba.gov
 
Financing Your Small Business Exports
 
(continued)
Program DescriptionWhat Can I Use it For?How Much Can I Borrow?How Will I Beneft?Where Can I GetMore Inormation?
Financing Your International Buyers
—Enables U.S. businesses to assist their international buyers in locating nancing to purchase U.S. goods or services when nancing mightnot otherwise be available. The Medium-Term Insurance orGuarantee protects exporter (insuranceonly) or lender (insurance or guarantee)against non-payment by a foreign buyeron U.S. made capital equipment salesand related services with repaymentterms between one and ve years.Provides nancing for foreignbuyers—usually at U.S. interest rates. The foreign buyer is the borrower andthey must be able to service the debtthey are taking on. Ex-Im Bank supportsup to 100% of the transaction after a15% required cash down payment bythe buyer.Providing buyer nancing canmake the difference in winningthe order or having the buyer goto a competitor, either foreign ordomestic.Export-ImportBank of the U.S.www.exim.govGSM-102 Credit Guarantees areextended to approved U.S. exportersusing dollar-denominated, irrevocableletters of credit to pay for food andagricultural products sold to foreignbuyers.Credit guaranty is provided onnancing for foreign buyers of U.S. food products therebyreducing nancial risk to lendersand encouraging nancing of U.S.agricultural products. The amount available for borrowing willbe determined by the involved banks.However, the amount guaranteed underthe GSM program cannot exceed theamount allocated for the region orcountry.Buyers, especially in emergingmarkets, will be able to placebigger orders if nancing isprovided.U.S. Department of  Agriculture, Foreign Agriculture Servicewww.fas.usda.gov
Investment Project Finance
—Enables U.S. businesses to invest in developing economies; such direct oreign investments typically result in stimulating signifcant U.S. exports.
Specialized nancing for investments byU.S. businesses in emerging markets,whether wholly owned or joint ventures.Financing a direct foreign investmentin up to 150 developing countries.Direct loans of $100,000 to $10 millionare available for U.S. small businessinvestors; guaranteed loans of up to$250 million are available under traditionalsmall and medium enterprise nancing. Allows for nancing that mightnot be available commerciallyto expand into internationalmarkets.Overseas PrivateInvestmentCorporationwww.opic.gov
Insuring Your Small Business Exports
Program DescriptionWhat Can I Use it For?How Much Can I Insure? How Will I Beneft?Where Can I GetMoreInormation
Insurance
—Insurance can mitigate the risk of U.S. businesses selling or investing overseas.Insures the exporter’s risk against non-payment by the foreign buyer due tocommercial and political reasons suchas insolvency, bankruptcy, protracteddefault, war, revolution and insurrection. Allows the exporter to offercompetitive, open account terms tobuyers to increase their market share;previously ineligible foreign receivablesmay now be added into the exporter’sborrowing base with their lender.Exporters can choose to cover anentire export portfolio or one buyerat a time. Coverage is between 90%and 98%; rates depend on policy typeand length of the credit term beingextended to the foreign buyer.Protects the exporter againstbuyer non-payment—a risk protection tool. Allows theexporter to offer buyers openaccount terms—a marketing tool. Allows the exporter to add insuredforeign accounts receivable to itsborrowing base—a nancing tool.Export-ImportBank of the U.S.www.exim.govInsurance covers investment in newventures or expansions of existingenterprises with developmental benetsto protect foreign benets.Insures U.S. investors, contractors,exporters and nancial institutionsagainst political risk, currencyinconvertibility and expropriation.Policies up to $250 million can beissued per project.Having political risk insurancecan make the difference betweenmaking or not making an investmentdecision in a difcult market.Overseas PrivateInvestmentCorporationwww.opic.gov
 
Grants and Contract Opportunities that Support U.S. Small Business Exports
Program DescriptionWhat Can I Use it For?How Much is Available? How Will I Beneft?Where Can I GetMore Inormation?
Feasibility Studies and Technical Assistance
—Grants that assist in the evaluation of technical, nancial, environmental and legal concerns for infrastructure development projects inemerging markets.U.S. companies conduct detailedanalysis for overseas project sponsors todetermine if a project is viable and worthyof implementation.Infrastructure development projectsin emerging economies focusedprimarily on energy, transportation,ICT, and the environment.$100,000 - $1 million per grantExpand international projectportfolio. Potential opportunities toserve as prime contractor or sub-contract with prime contractorsand host country sponsors. The U.S. Tradeand Development Agencywww.ustda.gov
Defnitional Missions
—Direct contract opportunities with the U.S. Trade and Development Agency. USTDA hires small businesses to conduct due diligence on potential projects indeveloping and middle-income countries that may qualify for USTDA grant funding. Contractors are required to travel to the specied host country to research thetechnical and nancial aspects of specic infrastructure projects.Detailed technical reports addressed toUSTDA that are part of the agency’s duediligence review process.Increase international exposureand technical expertise in emergingeconomies.$30,000-$100,000 and involves a visitto one or more countries to evaluatepotential projects for USTDA funding.Develop business and expandinternational contacts. Potentialopportunities for follow-onwork with host country projectsponsors. The U.S. Tradeand Development Agencywww.ustda.gov
Desk Studies
—Direct contract opportunities with the U.S. Trade and Development Agency. USTDA hires small businesses to conduct due diligence on potential projectsin developing and middle-income countries that may qualify for USTDA grant funding. Contractors review the early stage project planning, including the development of the scope andbudget of an activity that must be addressed before an investment decision can be made. No travel is required. A discrete analysis of well-denedproject proposals. A desk study reviewsand evaluates all aspects of a projectproposal, including the terms of referenceand budget, and recommends whetherUSTDA should provide funding for theproject.Provides preliminary assessments of the economic viability of proposedprojects and determines whether theymeet USTDA’s funding criteria.$2,500 to $10,000Expand international networand gain exposure to companiesoperating in emerging economies. The U.S. Tradeand Development Agencywww.ustda.gov
U.S. SMALL BUSINESS ADMINISTRATION
offers loanguaranty programs that enablethe small business exporter toobtain working capital to nancepre- and post- shipment needs,increase global competitiveness,enhance their ability to export aproduct or service and nancingfor acquisition of long-term xedassets.
EXPORT-IMPORT BANK OFTHE U.S.
, the ofcial export creditagency of the United States,assists in nancing the exportof U.S. goods and services tointernational markets. Ex-Im Bank does not compete with privatesector lenders but provides exportnancing products that ll gaps intrade nancing.
THE FOREIGN AGRICULTURALSERVICE OF THEU.S. DEPARTMENTOF AGRICULTURE
improvesforeign market access for U.S.products, builds new markets andimproves the competitive positionof U.S. agriculture in the globalmarketplace.
OVERSEAS PRIVATEINVESTMENT CORPORATION
 helps U.S. businesses investoverseas, fosters economicdevelopment in new and emergingmarkets and complements theprivate sector in managing risksassociated with foreign directinvestment.
U.S. TRADE ANDDEVELOPMENT AGENCY 
 funds various forms of technicalassistance, investment analysis,training, reverse trade missionsand business workshops thatsupport the development of amodern infrastructure and a fairand open trading environment.

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