Passport to Export Financing

Small businesses interested in opening or further developing new markets overseas for their products and services, while reducing their risk, have many options available.  

Ohio has deep expertise in global trade and  is the sixth largest exporting state in the United States.  The state of  Ohio has international trade offices spread through out the world including Brussels, Belgium, Tokyo, Japan, Hong Kong, People's Republic of China, Toronto, Canada, Tel Aviv, Israel, Mexico City, Mexico, Sao Paulo, Brazil, Santiago, Chile, Buenos Aires, Argentina, and Johannesburg, South Africa.  Ohio's international offices can arrange pre-qualified meetings with interested buyers and assist with translators and in-country transportation. 

Available export financing programs include:

1.  Ohio' Department of Development's Ohio International Trade Division (ITD) -  ITD promotes the export of Ohio products and services to strengthen Ohio's economy and advance its leadership position in the global marketplace.  ITD provides companies with market research, performs agent and distributor searches, participates in business trade shows, organizes trade and business investment missions and assists with export financing.   ITD also works with the Ohio Economic Development Division to promote Ohio and attract foreign investments into the state.   
2. SBA Short-Term Export Working Capital Program(EWCP) - In partnership with the Export-Import Bank, EWCP encourages participating lenders to provide export financing to small businesses by guaranteeing  repayment up to $1.5 million or 90% of a loan, which ever is less.  The loan can support a single transaction or multiple sales on a revolving debt for short-term working capital to exporters, using a one-page application, streamlined documentation with turnaround usually ten days or less. 
3. SBA Long Term Equipment and Facilities International Trade Loans - If your business is preparing or already engaged in international trade, or is adversely affected by competition from imports, this loan program is designed for you.  The loan maximum gross is $2 million and SBA-guaranteed amount of $1.5 million for an IT loan.  Loans for facilities or equipment can have maturities of up to 25 years.   You must demonstrate the loan will expand or develop an export market, is currently adversely affected by import competition, will upgrade equipment or facilities to improve competitive position, or must be able to provide a business plan that reasonably projects export sales sufficient to cover the loan.
4. SBA U.S. Export Assistance Center  Network - Because many small business exporters face unique challenges, the these centers provide technical assistance including marketing, management, training,  planning and legal assistance.  
5. Export-Import Bank Purchase of Insured Receivables Program - This program can help increase international sales, turn insured foreign receivables into cash immediately and reduce risk selling overseas. Commonly called multi-buyer export credit insurance, exporters of U.S. goods can reduce their risk of selling on credit terms by insuring their export accounts receivables with participating banks of Ex-Im Bank using the short-term Multi-buyer Export Credit Insurance program. Insurance protection covers non-payment by international buyers, extends competitive terms to international buyers and provides attractive financing with the exporter's lender by using insured foreign receivables as additional collateral. Best of all, you get paid upfront for your accounts receivables, minus the insurance coverage cost, instead of waiting for your customer to pay.
6. Overseas Private Investment Corporation Program (OPIC) - OPIC helps America's small businesses grow through investments in over 150 emerging markets around the world.  OPIC recognizes that small businesses wanting to participate in the global marketplace have unique requirements. Lack of resources to pursue opportunities abroad, concern over political risks, or the inability to find private sector support can prevent U.S. small businesses from expanding overseas. OPIC offers several lending options to assist U.S. businesses investing overseas.  OPIC provides expertise for specific transactions to meet the needs of the US Sponsor undertaking the investment serving small and mid-market companies.  If the Sponsor is a US corporation, with less than $35 million in revenues,  or an individual or investment entity with less than $27 million in equity, are eligible for a stream-lined insurance wrap to provide political risk insurance protection to US companies receiving loans through OPIC's Small Business Center.  Loan amounts for overseas investments range from $100,000 to $10 million with terms from 3 to 15 years.   While the eligible U.S. small business must own at 25percent of the overseas project, OPIC may be able to finance up to 65% of the total project costs.   Other programs are available for larger size companies. 
7. Foreign Trade Zones - Foreign-Trade zones were created in 1934 to encourage businesses to locate in the United States.  Under the program, companies may reduce, defer or eliminate Customs duties on imported parts, materials or components entered into the Zone.  Since 1978, the Cleveland-Cuyahoga County Port Authority has served as the Northeast Ohio Grantee for the FTZ #40 Program.  Northeast Ohio Trade and Economic Consortium (NEOTEC)  manages the FTZ  #181 Program for the following counties- Ashtabula, Trumbull, Portage, Summit, Medina, Wayne, Stark, Mahoning and Columbiana.  

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About the author: Marsha Powers is president and CEO of Powers Financial Group Inc., which specializes in helping companies secure financing for business loans, commercial real estate, mergers and acquisitions, restructuring debt and consulting services.  

www.powersfinancial-group.com

 

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