Read the source article by The International Trade Administration (ITA) here.
One of the biggest obstacles many companies face when thinking about exporting is cost. If that sounds familiar, don’t panic – help may be at hand with the finance programs offered by the US government. In this quick guide, we’ll walk you through how they work, and see which ones might help you take that critical next step to global expansion. There are four main types of US government financing available for potential exporters. Let’s take a look at each one in more detail.
Export Development and Working Capital Financing
This route potentially gives US business the liquidity they need to accept new business orders, grow international sales and successfully compete in the global marketplace.
- Small Business Administration: Export Working Capital Program
This option provides up to $5 million in short-term transaction-specific loans to US small business exporters. Typical uses for the funding could include pre-export financing of labor and materials and post-shipment financing of the accounts receivable generated from transaction-specific overseas sales.
- Export-Import Bank: Working Capital Guarantee Program
This working capital guarantee program provides transaction-specific working capital loans to US exporters, made by commercial lenders and backed by the EXIM Bank’s guarantee. Uses for this financing might include buying finished products ready to be exported; funding the cost of raw materials; and paying for equipment, supplies, labor and other overheads needed to produce goods and/or provide services for export. The funding could also be used for covering standby letters of credit serving as bid bonds, performance bonds, or payment guarantees.
- Small Business Administration: Export Express Program
This program could be ideal for businesses that have promising export potential, but simply don’t have the capital needed to cover the initial costs of entering a new market. Up to $500,000 in financing is available to buy or produce goods, or to provide services for export. This might typically be for buying new equipment, inventory or real estate.
Facilities Development Financing
This funding route allows US business to purchase, build, renovate and improve facilities and equipment in order to produce goods or services for export and international trade.
- Small Business Administration: International Trade Loan Program
US businesses that are planning to start trading internationally, or who face competition from imports can apply for up to $5 million in financing, which can be used to upgrade equipment and facilities. It can also potentially be used to refinance existing indebtedness, but it can’t be used to buy a business.
Financing for your International Buyers
Here, US businesses can use finance to help their international buyers source funding in order to buy US goods and services – for example, when no funding is available for them in their own country, or the interest rates on available funding are not viable on terms over 1-2 years. The Export-Import Bank offers a range of loan programs which can be made available for refurbished equipment, software, some banking and legal fees, and certain local costs and expenses.
This potentially enables your private or public sector international buyers to access the financing required to buy US goods and services.
As long as they’re creditworthy, private and public sector international buyers can secure fixed-rate loans to purchase US goods and services.
- Finance Lease Guarantee Program
Instead of taking out traditional installment loans, this allows creditworthy international buyers to be approved for lease financing.
- Ex-Im Bank Export Credit Insurance
Exporters can offer their foreign buyers competitive open account terms and minimize the risk of non-payment.
- USDA, Foreign Agricultural Service Export Credit Guarantees
This option underwrites credit extended by the private banking sector in the United States to approved foreign banks using dollar-denominated, irrevocable letters of credit to pay for food and agricultural products sold to foreign buyers. This route can stimulate sales to buyers in countries where credit is needed to maintain or increase US sales – but where loans or other funding might not be possible without the guarantees.
Investment Project Financing
This funding can be used by US businesses for large scale projects requiring significant capital such as infrastructure, telecoms airports and natural resource extraction.
Overseas Private Investment Corporation Small and Medium-Enterprise Financing:
Medium- to long-term funding can be made available through direct loans and loan guarantees to specific investment projects in developing and emerging markets.
For more information, head over to export.gov which has many more resources and free guides to help put your export plans into action.
Explore Market Finder for more resources and free guides to help put your export plans into action.