The conundrum is that everyone needs working capital—both the U.S. seller and the foreign buyer. When a small business owner gives credit terms to an international customer, the company must maintain higher levels of working capital. Typically, the business owner turns to their lender for working capital financing; however, many lenders encounter challenges providing that need because of commercial or foreign market risks.
To overcome this barrier, the U. S. Small Business Administration SBA offers a tool that can unlock working capital financing for foreign sales—the Export Working Capital Program EWCP. Quite simply, SBA will provide a 90% loan guarantee to lenders who extend working capital loans for U.S. small business exporters, with loans as large as $5 million.
EWCP works by allowing the business to borrow against the value of their foreign accounts receivable and export-bound inventory. EWCP loans are typically 12 months, whereupon it can be replaced with a new loan allowing ongoing access to working capital for international sales. Additionally, EWCP can be used to support the issuance of bid bonds, performance bonds, and advanced payment guarantees that a foreign buyer may require of a U.S. exporter.
To find out more about EWCP, connect with our team of regional export finance loan officers who can help you connect with active SBA lenders in your community and help craft an export working capital package that fits your company’s needs. Each of these professionals is experienced in export financing, and they are teamed with U.S. Commercial Service staffers who bring insights on market opportunities and regulatory compliance that can inform your firm’s international sales strategy. Find your local SBA export finance professional at http://www.sba.gov/content/U.S.-export-assistance-centers
So, when selling to international markets becomes a delicate working capital dance, remember that you have a willing partner at SBA.
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