Guide to Applying for an SBA Export Loan | Fora Financial Blog
Close
Guide to Applying for an SBA Export Loan
January 11, 2018
What is an SBA Export Loan

Guide to Applying for an SBA Export Loan

January 11, 2018
Businesses that need financing to export their products often find that traditional lenders are not interested. This is because banks see loans for exporting as high risk. The SBA has created several loan programs to help exporters get financing, and provide a guarantee on these loans of up to 90 percent.

This group of loans is known as SBA Export Loans. There are three different loans that fall into this category:

  • Export Express
  • Export Working Capital Program (EWCP)
  • International Trade Loan Program

Like other SBA loans, export loans work in conjunction with a traditional lender and the SBA. These SBA personnel are called SBA Senior International Credit Officers and are located in U.S. Export Assistance Centers across the United States.

In this post, we’ll discuss what each export loan is used for, what the qualifications are, and how the application process works.

Summary of Export Loan Programs

Each export loan was created to finance specific export-related activities The following provides a summary of each SBA Export Loan.

Export Express

  • Offers the broadest range of use
  • Simplest of the three export loans
  • 90 percent guarantees on loans up to $350,000
  • 50 percent guarantees on loans up to $500,000
  • Can still apply for regular SBA loans
  • Fast application process and response (some loans approved within 36 hours)

Export Working Capital Program (EWCP)

  • Provides working capital for fulfilling export orders
  • 90 percent guarantees on loans up to $5,000,000

International Trade Loan Program (ITLP)

  • Described as “positioning the firm for export”
  • Like 7(a) loans but with a 90 percent guarantee
  • 90 percent guarantees on loans up to $5,000,000
  • Easiest to qualify for
  • Great as an initial export loan

Regarding the ITLP and positioning, this means the loan is used to help position a business as a leading exporter and improve overall U.S. exports.

Application Process

The SBA Export Loan application process follows nearly the same process as non-SBA Export Loans. Businesses apply with a participating lender, who will forward the applicant’s request to the SBA. From there, the SBA will determine if the applicant is eligible for the specific Export Loan program.

The application process can be broken down into four steps:

  • Apply to participating lender
  • Submit application package and SBA’s borrow information form to lender
  • Upon approval, lender submits eligibility information to the SBA
  • The SBA reviews loan for final approval

For Export Express Loans, it’s important to note that the lender must submit the Supplemental Export Express Lender Agreement to the SBA. Verify this with your lender when they are submitting paperwork to the SBA.

Qualification Criteria

To get an SBA Export Loan, a business must qualify as a small business. There are two criteria that must be met to be categorized as a “small business,” according to the SBA:

  • Tangible net worth of $15 million dollars or less
  • Net income after taxes (not including carryover losses) for the last two years of $5 million dollars or less

Because there are different qualifications for each type of loan, we’ll list them individually:

Export Express

  • Expanding into new or existing export markets
  • Operating business for last 12 months
  • Demonstrate proceeds will be used to support business’ export activity

Export Working Capital Program

  • Meet SBA 7(a) eligibility and size standards.
  • A waiver is available for the 12-month business operation requirement if the applicant can demonstrate export expertise and business experience.
  • Personal guarantee of owners (tt least 20 percent ownership)

International Trade Loan Program

  • Can help grow existing export markets or create new ones
  • Or, your business has been affected by imports, and you can show how the loan will benefit your competitive position

In addition to qualifications, there are use restrictions for each loan.

Use of Proceeds

The SBA Export Loans must be used for the following expenses:

Export Express

  • Export financing
  • Development of new international markets
  • International trade shows, equipment or real estate

Export Working Capital Program (EWCP)

  • Working capital related to exporting
  • Finance foreign accounts receivable
  • Purchase of goods or services for export

International Trade Loan Program

  • Equipment, real estate, refinancing, permanent working capital

Conclusion

Small businesses may believe that exporting of products is only for big companies. That simply isn’t the case. These loan programs are tailored to small businesses, and the SBA wants to help small businesses grow their exports by expanding in existing markets or creating new ones.

With SBA wanting to see U.S. exports grow through small business, these loans could be worth pursuing.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Yahoo Gemini