1. U.S. Small Business Administration Export Finance Programs
Global Business Club
of Mid-Michigan
Global Opportunities for Michigan Manufacturers
March 24, 2011
John O’Gara
Export Solutions Group
U.S. Small Business Administration

2. U.S. Export Assistance Center (USEAC) “Yous-e-ack”
Created in 1995
USEACs are located in more than 100 cities
U.S. Dept. of Commerce, SBA, Eximbank
Provide SME’s with hands-on export marketing and trade finance support
Work closely with federal, state, local, public, and private organizations

3. National Export Initiative (NEI)
President Obama’s goal of doubling exports over five years to support 2 million jobs in America (Jan 2010)
Three areas of focus:
Trade advocacy (educating firms about overseas, opportunities, connecting them w/new customers, advocating for their interests)
Improving access to credit (asks ExIm Bank to increase available financing for SMEs)
Continue rigorous enforcement of international trade laws

4. Michigan Top Five Export Countries - 2010
Canada $21.7 billion
Mexico $ 7.4 billion
China $ 2.2 billion
Germany $1.5 billion
Japan $1.2 billion
2010 Michigan Exports Worldwide Total……$44.5 billion

5. Risks of International Trade
Commercial
Political or Country
Transit
Currency Fluctuation
Strikes, Riot, Civil Commotion
War

6. Methods of Payment Cash in Advance
Letter of Credit Irrevocable vs. Revocable Sight vs. Time
Documentary Collections Cash Against Documents Documents Against Acceptance
Open Account

7. Export Finance Needs Pre-shipment financing Post-shipment financing
Pay market development costs
Post bid/performance bonds
Acquire/manufacture goods
Post-shipment financing
Provide supplier credit ( Open account sale)
Post warranty bonds

8. Export Working Capital Program (EWCP)
“A business should not lose a viable sale due to a lack of working capital”

9. Export Working Capital Program Features
Supports single transactions or multiple transactions.
Guaranty fee ¼% of Guaranteed portion
Max. SBA Exp/Amt. = $ 4, 500,000/$5,000,000
90 % guaranty for the lender
No minimum U.S. content requirement.
Can support sales to military buyers.
Short turnaround time < 10 days.
Supports Standby L/Cs

10. Use of Proceeds
Standby Letters of credit for bid or performance bonds-
Acquire/produce goods or services for export
Accounts Receivable of such foreign sales

11. EWCP - Indirect Exports
Applicants who produce products or services that enter into the export channel, but do not directly export their products are eligible for EWCP financing
Manufacturers using an Export Trading Company
Suppliers to other domestic manufacturers
Requires certification from domestic customer that goods are in fact being exported.

12. EWCP - Collateral
Transactional financing has a self-liquidating aspect:
First lien on all assets being financed
Personal guarantees of all owners of 20% or more who are active in the business
Other collateral on a case-by-case basis

13. EWCP Fees
One time guaranty fee of ¼ of 1% of the guaranteed portion for loans with a maturity of 12 months or less.
0.55% basis point on-going fee paid by lender
Exporter and lender negotiate Rate and fees;

14. What Do We Look for? Exporter’s ability to perform
Purchase Order, L/C or signed contract
Creditworthiness of foreign buyer
Creditworthiness of exporter
Terms of sale and method of payment

15. Logistics & Export Documentation

16. INCO Terms TERM Cost of Goods at Factory Transport to Dock
Loading Onto Vessel
Ocean or Air Freight Charges
Shipping Insurance
Unloading Charges
EX-WORKS
(EXW) X
FREE ALONG SIDE (FAS)
FREE ON BOARD (FOB/FCA)
COST + FREIGHT
(CFR/CPT)
COST + INS+
FREIGHT
(CIF/CIP)
EX-QUAY
(DEQ)

17. EXPORT EXPRESS Fast turnaround Streamlined application
Lender uses own forms
90% guaranty up to $350,000
75% guaranty to max of $500,000
Use of proceeds supports export activity

18. SBA Export Express Use of Proceeds
Export development activities such as marketing and trade shows
Transaction specific financing such as production cost of labor, materials and overhead
Revolving lines of credit for export purposes

19. SBA Export Express Use of Proceeds
Facilities or equipment to be used in the U.S. to produce goods or services for export
Loan proceeds may not be used to finance overseas operations
Lender must review Eximbank CLS to verify eligibility

20. Trade Finance Success Firm: Boat Lifts, Inc.
Product: Boat hoists for pleasure craft other commercial applications
Situation: Order from Norway for $440M
Need: Pre-shipment working capital to fill a specific purchase order, payable by ILC.
Solution: A $330M EWCP to support pre-shipment working capital needs. 20 20

21. Trade Finance Success Firm: Dynamic Manufacturing
Product: Industrial wood chipping machinery
Situation: Orders from multiple countries
Need: Pre-shipment working capital to fill purchase orders
Solution: A $2MM EWCP to support pre-shipment working capital needs 21 21

22. Trade Finance Success Firm: Metal Plating, Inc.
Product: Anodizing and phosphating lines
Situation: 2 Contract(s) for $3MM with Egypt. Down payment of 30% for both ($900M) requiring Standby L/C’s.
Solution: A $1MM EWCP to support issuance of Standby L/C’s.

23. Trade Finance Success Firm: Thumb Tool & Die
Product: Plastics processing machinery and strand pelletizing equipment.
Situation: Order from China $3.7M.
Need: Pre-shipment working capital to support standby L/C and manufacture of equipment.
Solution: 2 loans:
A $500K EWCP to support Standby L/C- 18 months
A $1.5M EWCP Co-Guaranteed by Eximbank- 1 year

24. State Trade & Export Promotion(STEP) Grant
Created by Small Business Jobs Act of 2010, Section 1207
Three year program
Competitive grant applied for and administered by States
Goal
increase the number of small businesses exporting
Increase value of exports for small businesses currently exporting
Deadline for proposals, one from each State, April 26, 2011
Anticipate availability Summer 2011

25. Contact Info:
John R. O’Gara
Regional Manager
Office of International Trade
U.S. Small Business Administration
U.S. Export Assistance Center
8109 E. Jefferson Ave., Suite 110
Detroit, MI
(313)