The export marketplace is a difficult someone to jump into. Businesses looking to launch or expand exporting initiatives often find that banks are unwilling to give loan to them on account of the risk involved. Thankfully, the SBA offers three home loan programs to help fill this funding gap. In the following paragraphs, we’re going to detail the structure of these three loan programs and explore the kinds of exporters that are in position to take advantage of each.
SBA Export Loans: The Basics
As the SBA states:
- Nearly 96 percent of shoppers live outside the US
- Two-thirds of the world’s purchasing power is within foreign countries
Clearly, for merchants seeking to expand their customer base, exporting is really a no-brainer. However, it’s hard for a company to grow in to the international marketplace for the straightforward proven fact that lenders tend to be averse to providing export loans. Again, I’ll quote the SBA on the subject:
Most U.S. banks view loans for exporters as risky. This will make it harder for you to definitely get loans for things like day-to-day operations, advance orders with suppliers, and refinancing existing debts. That’s why the SBA created programs to supply lenders with up to a 90 percent guaranty on export loans.
As the normal federal loan guarantee (including in the SBA) ranges from 50% to 75% from the loan amount, we have seen how support for exporters is a particular policy goal of the federal government. The opportunity presented by the SBA to businesses looking to launch or expand their exporting is significant. With this article, we desired to highlight the 3 different export home loan programs offered by the SBA and show which businesses are eligible to take part in these home loan programs.
When You’re Eligible For An SBA Export Loan
To be eligible for an SBA export loan, obviously, you must be in the business of exporting. Beyond that, each of the three export home loan programs features its own eligibility requirements. We’ll detail these requirements whenever we discuss these programs individually.
If you discover that your business is not entitled to the SBA’s export loan programs, you might still have the ability to make the most of another SBA loan program. The most popular of these is the 7(a) loan program. Read ’s 7(a) loan explainer to ascertain if this program may well be a good fit for the business.
International Trade Loan (ITL)
The International Trade Loan (ITL) program is intended to help smaller businesses enter and expand into international markets and also to invest in businesses adversely affected by import competition to make them more competitive in the marketplace. The ITL offers a combination of fixed asset financing, capital financing, and debt refinancing using the SBA’s 90 % guaranty around the total loan amount.
Interest Rates & Fees
Regarding the rates and costs charged by ITL program lenders, the SBA says:
Lenders may charge between 2.25 to two.75 % above the prime rate (as published in the Wall Street Journal) based upon the maturity of the loan. Interest rates on loans of $50,000 and fewer can be slightly higher.
Other ITL program details range from the following:
- The maximum loan amount is $5 million
- The loan terms are as much as Ten years for capital and Twenty five years for real estate
- The fees are the same as the ones from the SBA’s 7(a) loan program:
- Annual service fee of 0.55% from the guaranteed portion of the outstanding balance of the loan
- For loans of $150,000 or less: 2% from the guaranteed portion
- For loans of $150,001 to $700,000: 3% of the guaranteed portion
- For loans of $700,001 to $5,000,000: 3.5% of the guaranteed portion as much as $1,000,000, plus 3.75% from the guaranteed portion over $1,000,000
- The above rates don't apply to loans having a maturity of 12 months or less. For those loans, the charge is 0.25% from the guaranteed portion
ITL Borrower Requirements
In to qualify for an ITL loan, your business must satisfy the same requirements as applicants to the 7(a) loan program (see our 7(a) explainer piece for more information). Additionally, you must establish the loan allows your business to grow or develop an export market or you have to show that your company continues to be adversely affected by import competition and that the borrowed funds will allow your business to improve its competitive position.
SBA Export Express
The SBA’s Export Express loan program is the simplest of their three export loan programs. It is a fast-track program that gives streamlined financing as high as $500,000 to eligible borrowers. Intended to be a speedy financing solution, the SBA claims it will provide an response to your funding request “in 36 hours or less.”
Interest Rates & Fees
- The rate of interest to have an Export Express loan of $25,000 or less can range from 4.25% to 4.75% over the prime rate.
- For loans between $25K and $50K, the speed ranges from 3.25% to 3.75% over the prime rate.
- For loans above $50K, the rate ranges from 2.25% to 2.75% above the prime rate.
- The maximum loan amount is $500,000.
- The loans and fees are the same as the ones from the ITL program (which, in turn, are the same as those of the 7(a) program) with the exception that the maximum term for an Export Express revolving line of credit is 7 years.
SBA Export Express Borrower Requirements
As with all SBA export loan programs, this program has got the same business size requirements as the 7(a) program. Additionally, based on the SBA, “Any business that has been functioning, while not necessarily in exporting, for at least 12 full months and may show the loan proceeds will support its export activity is entitled to Export Express.”
Export Capital Program (EWCP)
The SBA’s Export Working Capital Program (EWCP) guarantees payday loans associated with an exporter’s orders and receivables. It provides term loans and lines of credit.
Interest Rates & Fees
Regarding EWCP interest rates, the SBA only states that “Lenders and borrowers negotiate the eye rate and there is no SBA maximum interest rate limit.”
The maximum amount borrowed is $5 million — and the loan terms and costs are the same as the ones that apply to the SBA’s other export home loan programs and it is 7(a) program — except that an EWCP revolving credit line has a maximum term period of 12 months and an EWCP term loan includes a maximum term length of Three years.
EWCP Borrower Requirements
A potential EWCP borrower must satisfy the 7(a) program’s requirements and have a minimum of 12 months of business history — though this last requirement can be waived in certain instances. The SBA also requires the personal guarantee of owners (20 percent or even more ownership).
Which SBA Export Program Is Right For My Small Business?
Which from the export programs discussed above should you make an application for? That will depend around the nature of the business needs.
Choose The International Trade Loan Program If…
- You want a loan for fixed assets used for construction, building, and/or property equipment
- You’re searching for working capital for export transactions and can afford to wait 5-10 days for a decision in the SBA
- You need assistance rivaling foreign importers in your industry
Choose The SBA Export Express Program If…
- You need a smaller loan ($500K or less)
- You desire a loan as quickly as possible
- You want just as much flexibility as possible with your loan
Choose The Export Capital Program If…
- You need export capital during long payment cycles
- You want flexibility in negotiating export payment terms
- You don’t mind the personal guarantee requirement
How To try to get An SBA Export Loan
If you’re searching for guidance in finding an SBA preferred lender for export loans, the SBA offers some helpful resources which should aid your search, as does .
We’ve compiled a list (drawn from the SBA’s own data) from the 10 lenders which have distributed the most SBA money to qualifying smaller businesses. Simply according to their documented history, the top 10 SBA lenders are all great sources for SBA export loans. You’ll also want to browse the SBA’s Lender Match service, which will help connect your small business to the lenders that best suit your unique business and it is financing needs.
Learn About Other SBA Loan Programs
You might find that you don’t meet the eligibility requirements to have an SBA export loan or that the different type of SBA loan might be a better fit for your small business. If that’s the situation, have a look at our other SBA resources to obtain a fuller sense of everything the SBA has to offer.
- SBA Loans Explained: All you need to Know
- Your Complete Help guide to SBA 7(a) Loans
- SBA 504 Loans: Your Guide To SBA/CDC Property & Equipment Loans
- SBA Loan Calculator
