ImportsAccording to the Office of the US Trade Representative, 95 percent of the world’s consumers are outside of the United States and they represent 75 percent of the world’s purchasing power. Could some of those consumers use your products? If so, why aren’t you selling to them?

•    Fear of non-payment?
•    Lack of working capital? 
•    Inability to compete with non-US competitors who offer more liberal credit terms?

The National Minority Business Council, Inc. (NMBC), an advocate of minority-owned businesses, is partnering with the Export-Import Bank of the United States (Ex-Im Bank) to assist you.
Bruce Drossman, export finance manager of Ex-Im Bank, visited the NMBC recently to discuss two programs intended to help small businesses access necessary capital and manage risk: the Working Capital Guarantee Program and Export Credit Insurance.

The Working Capital Guarantee Program

The Working Capital Guarantee Program (WCGP) provides export working capital financing through commercial lenders, guaranteed by Ex-Im Bank. According to Ex-Im Bank’s website, financing can be used for “purchasing finished products for export; paying for raw materials, equipment, supplies, labor and overhead to produce goods and/or provide services for export; covering standby letters of credit serving as bid bonds, performance bonds, or payment guarantees; and financing foreign receivables.”  

To qualify, at minimum, you must have US based business operations and provide reasonable assurance of repayment (i.e., one year operating history, debt service ability, adequate capitalization relative to the requested loan amount).  

Worried about your eligibility?  Don’t rule yourself out before learning more about the program on www.exim.gov. Drossman described the typical program borrower as one with a large contract in relation to its balance sheet and “tight liquidity, negative cash flow; losses or erratic earnings; minimal net worth; short operating history; and collateral shortfall;  [with] work-in-progress financing needed.”  

Need help? The NMBC offers assistance with the application process as part of their effort to help U.S. businesses expand and succeed internationally. “We recognize the importance of providing the technical assistance and support that is necessary to ensure that each firm develops the capacity to succeed in the global marketplace over the long term, by taking advantage of the current opportunities,” noted Fritz-Earle McLymont, managing director of the NMBC Global.

Are your working capital financing needs small?  In March 2012, Ex-Im Bank announced it would soon be rolling out Global Credit Express, a pilot program to improve access to financing for small businesses with working capital needs less than $500,000. Drossman explained that although the WCGP has no predetermined minimum size limitations, “it has proven difficult to attract interested lenders under the Guarantee for small amounts. To address this, Ex-Im Bank announced the pilot introduction of Global Credit Express, which will provide for Ex-Im Bank direct-funded export working capital facilities up to $500,000 in size to qualifying companies under referral from Originating Financial Institutions.” Drossman expects the referral banks to be announced soon.

Export Credit Insurance

Fear of nonpayment prevents many small businesses from succeeding internationally. Export Credit Insurance reduces the risk involved in extending credit to foreign buyers by providing up to 95% payment default coverage for commercial risks like bankruptcy and certain political risks like war. 

Allergic to red tape and long application processing times?   Apply online for Ex-Im Bank’s Express Insurance. If you need a credit decision on one or two foreign buyers, and each buyer exposure is less than $300,000, Ex-Im Bank will process your online application, make a credit decision on two buyers, and send you a policy quote within five (5) business days.  Transactions over $300,000 take longer. 

To qualify, applicants must be SBA-defined small businesses and have “at least a year’s operating history and a positive net worth; an average of less than $7.5 million in export credit sales over the last 3 years (excluding Canadian sales and any under letter of credit, cash, or sight payments); an existing file with Dun & Bradstreet; and ten or fewer foreign buyers on credit terms. See the Ex-IM Bank website for more information.

Want the inside scoop on Ex-Im bank’s application process? Visit NMBC.org to read notes from my Q&A session with Bruce Drossman, during which he spoke candidly about the elements of a successful application and provided recommendations for improving submissions.