There can be large time spans between when you commit to international sales and when you get paid for sales. This is true for all exporters, but particularly so for new exporters or new markets. Because of the increased risk, some U.S. banks that support domestic business will not finance loans backed by oversees receivables. Fortunately, there are a number of government sponsored loan programs, insurance, and grants to help small business export. Examples include USDA Export Credit Guarantee Program (GSM-102); an example of Non-USDA Programs is Working Capital Guarantee Program at Export-Import Bank and U.S. Small Business Administration.
Step 8.1: Financing
Programs to help finance exports and provide liquidity include the Export Express Loan Program and Export Working Capital Program (U.S. Small Business Administration) and the Working Capital Guaruntee Program (Export-Import Bank).
There are also programs to help international customers finance their purchase of U.S. products. These include Medium-Term Insurance or Guarantee (Export-Import Bank) and Export Credit Guarantee Program (Foreign Agricultural Service, USDA).
- Consult the trade finance guides in step 7
- Trade finance guide 3 (International Trade Administration, USDC)
- Small business financing of foreign exports (U.S. Small Business Administration)
- Export finance guide (Foreign Agricultural Service, USDA)
- International finance guide (Export.gov)
Step 8.2: Insuring
Insurance is availabel to mitigate the risk of non-payment in international transactions. For example, the Export-Import Bank provides insurance against non-payment due to insolvency, bankruptcy, or protracted default. Though not free, the Export-Import bank is madated to assist exporters and offer terms that other domestic or international banks or insurance companies will not provide. The advantage of insurance is that it allows the seller to trade using an open account method of payment, which is attractive to foreign buyers.
Step 8.3: Programs
The Branded Market Access Program (MAP) is a USDA funded promotion designed to build brandname recoginition of agricultural products in foreign markets. Up to 50% reimbursement is available for eligible marketing activities.
Action: Branded Market Access Program (Foreign Agricultural Service, USDA)
Disclaimer: This manual is a demonstration based on interviews of successful exporters. Each individual case is specific and optimal strategy may differ from those discussed here. References to sources and documents outside of WSU Extension and the IMPACT Center are for reader convenience. WSU does not review, control, or take responsibility for their content, nor does WSU or any person therein explicitly or implicitly endorse the positions or policies of these sources.
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Created December 22, 2011