Resources to help you crack the export market
U.S. businesses are selling more goods and services abroad than ever before, reaching an all-time record of $2.3 trillion in 2013—and 98 percent of American companies that export are small businesses.
Despite the statistics, many small businesses still face big challenges when it comes to financing and managing their export business. A recent trade seminar, hosted by the Department of Commerce and several other federal agencies, identified three commonly cited financial obstacles small businesses have to going global:
- How to obtain working capital and financing to support export transactions
- Where to seek assistance for entering, growing and succeeding in global markets
- How to get paid by foreign buyers overseas
Helping entrepreneurs overcome such challenges are key priorities for the SBA (www.sba.gov) and the International Trade Administration (www.trade.gov), which supports the President’s National Export Initiative.
Here is how they can help:
Getting export financing
Securing a business loan is not easy and many small businesses find that they do not qualify for traditional bank loans. While banks may look upon small businesses as a high risk investment, that does not mean they have nothing to offer small businesses. Many participate in SBA’s lending programs, including financing programs designed to help small business exporters.
The simplest and quickest SBA exporting loan product is the SBA Export Express Loan Program, which offers financing up to $500,000. Loans can be approved in 36 hours or less and are available as term loans or a revolving line of credit, meaning you draw on the funds only when you need them.
It is important to know that the SBA does not actually lend businesses the money; instead it provides a guarantee to the lending bank or institution that in turn lends your business the money—alleviating the investment risk for the bank.
Check out this quick video for an overview of the Export Express Program.
Other SBA finance programs include the International Trade Loan Program, which helps businesses entering highly competitive international markets where investments are needed to better compete.
Finally, SBA also offers its Export Working Capital Program, which provides advances to fund export transactions from purchase order to collections.
The federal government has several additional loan programs, grant and contract opportunities, and insurance programs for exporters. To find the program that best suits your export needs, visit Business.USA.gov.
Getting help entering global markets
If you need help getting started with exporting, look no further than the wealth of resources online and in-person:
- Business.USA.gov/Export: This government site offers a wide range of resources to help small businesses being and expand into exporting.
- Export Assistance Centers: Located in major metropolitan areas across the U.S., each center is staffed by experts from the SBA, Department of Commerce, Export-Import Bank and other public private organizations.
- Trade Information Center: You can also contact a Trade Information Center at 1-800-USA-TRADE. These centers are staffed by international trade specialists who provide information about government export programs; the export process; market research; statistics and trade leads; trade events and activities; public and private export financing; and referrals to federal, state and local resources.
Getting paid by foreign buyers overseas
Finally, getting paid by an overseas buyer is naturally a big concern for cash flow aware small businesses. Furthermore, if you do not get paid on time, then you can become a credit risk yourself.
But how do you even get reliable credit information about a foreign buyer and how secure are international payments anyway?
Of course, preventing bad debts before they occur is always favorable to attempting to resolve them after the fact. But if you do run into payment issues and disputes, Business.USA.gov offers useful advice and resource in its “Help Getting Paid” guide.
If you do not get answers or need to talk to someone, contact a U.S. Export Assistance Center.
Caron Beesley is a small business owner, a writer and marketing communications consultant. Caron has worked with organizations including the Small Business Administration (SBA.gov) and private companies to promote essential resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley.