SBA offers a streamlined version of their International Trade Loan Program for businesses to develop or expand their export markets, called the SBA Export Express. This program provides funding up to $500,000 and the SBA approves within 36 hours.
Some of the most often uses of funds include:
- Standby Letters of Credit when required as a bid bond, performance bond or advance payment guarantee
- Participation in a foreign trade show
- Translation of product brochures or catalogues for use in overseas markets
- General lines of credit for export purposes
- Service contracts from buyers located outside the United States
- Transaction-specific financing needs associated with completing actual export orders
- Purchase of real estate and equipment to be used in the production of goods or services for export
- Provide term loans and other financing to enable small business concerns, including export trading companies and export management companies, to develop foreign markets
- Acquire, construct, renovate, modernize, improve or expand productive facilities or equipment to be used in the United States in the production of goods or services for export
To get the SBA Export Express loan your business has to show the ability to export into a new market or expand a current export market. Also this loan is not suitable for a startup as eligibility requires a business to have been in business for at least one year but this does not mean in exporting.
How It Works
The SBA is able to turn around the SBA Export Express guarantee approval within 36 hours by having the banks do a majority of the leg work. While the SBA turnaround is fast, the bank will take a bit of time in completing the paperwork. Typically if you can make it through the bank’s approval process, you are in good shape to get the guarantee.
The guaranty provides up to 90% if the loan amount is $350,000 or less, or 75% if the loan amount is from $350,001 to $500,000.
The SBA does not set the rate of the loan with the exception of setting a cap. The borrower and bank negotiate on the amount, but it can be either fixed or variable.
An SBA Export Express loan is usually 5 to 10 years on working capital, 10 to 15 years on machinery and equipment and up to 25 years on real estate, while revolving lines of credit may not exceed 7 years. The SBA fee for an Export Express with a 12-month maturity or less is 0.25% and applies only to the guaranteed portion of the loan.
Sufficient collateral will also be required to cover the amount being borrowed.
One of the unique aspects of the SBA Export Express loan program is the availability of free technical assistance that comes with the loans to help exporters with marketing, management and planning assistance.
We worked with a small medical software company that was working with a client in China that wanted to adapt their software to their market. The trouble was they could not get the financing to hire additional staff.
The SBA Export Express loan was used to bolster the lender’s confidence in making the loan. The bank took a lot of time getting all of the documentation in order but once it was in order, they had SBA approval the next day.
Why Get an SBA Express Loan?
One of the big hurdles with export financing is that most banks do not lend against export orders, export receivables or letters of credit since it is difficult for the business to collect if their customer decides not to pay and the security for the loan is essentially uncollectable by the lender. The guarantee takes most of the risk away from the lender.
The other big plus for the SBA Express program is the speed at which the SBA approves loans. The bank will be doing a lot of the work the SBA normally does, so don’t expect to be a fast loan however.
Where To Find the SBA Express loan
A lender must be an SBA Express lender, which not all banks are certified for. To find a list of Express lenders follow this link.