Basics of Export Financing

Wednesday, May 4 @ 09:05 AM
Charles Mouse - financial expert

This country is always focusing to increase the level of export. The main aims are to increase the job opportunities in the country. Current government has already engaged in an agreement with the National export initiative or else NEI. The aim of the agreement was to double the value of export in the country.

These agreements will definitely boost the export of the country. This will happened in few areas. The people who has already been exporting has fair chance of improving their amount of export while the people who has not started to export the things yet will also have an advantage of exporting. So many businesses in the country would find some easy way to finance and other requirements that is needed to enhance the performance up to the level of export. All the sudden the sales will go up.

In the year 2009 the export and import trade finance abilities was around US$ 21 billion. One of the main purposes of this agreement was to double the ability of import-export financing comparing to the amount it was in year 2009. On the other hand the banks who are engaged in the field of import export are eyeing to open few doors for those who are seeking for cash flows to their businesses.

Then the next problem is to convince the businessmen’s to go ahead with the new funding methods.

Small business administration or else SBA are providing you the relevant information and all other resources to expand your business in to the exporting arena. And it will provide you some further information’s such as how to operate as per the United States business law and many other opening areas of export. On the other hand it has developed some finance options for small businesses.

There are some programs that helps the small business who are engaging in the business of exporting , that helps to get finance in to their organizations. The best example is the export working capital program or else EWCP. This program provides guarantees to the firms who are providing short term financial facilities to the organizations. If your business is already making some money through export businesses you have chance of applying to this EWCP program and through that apply for a Bank loan. Thus the businesses have the ability of expanding their business or enhance their factories and other facilities up to the international standard.

SBA reveals that most of the EWCP loans are used for the purpose of transaction financing. In Further elaboration, the EWCP loans are normally supporting hundred percent of the cost of supply of an export dealing. On the other hand the EWCP loans can even be used for the purpose of working capital management where you wait till the payment comes from the client and you are paid by the EWCP. Most of the EWCP loans are short term loans; however, you may be able to get a loan for your own purposes

You as exporters few things have to be keeping in your mind. The goods need not to be produced in the United States. However, the title and the shipping process should have been incurred in the country. And also you will not get any benefit if you export the goods for a country that has been banned by the government.

If your business is having less than five hundred employees and you are engaging in the business of export, then you can get a loan under this program. However, the maximum amount of loan would be US$ 2Mn. However, if you are a wholesaler your employees’ amount should be less than hundred.

SBA provides some assistance to the smaller business to find out new export markets. Initially the SBA will funded the business $ 250,000 as an initial payment. And SBA further guarantees that they can provide the required guarantees within 24 hours after initial discussions. However, bank underwriting will be needed. This is a real benefit for those smaller scale businesses.

The facility is basically available for the various kinds of businesses which are engaged in the field of exporting. These categories include wholesalers, service exporters as well. The loan application must include the purpose of the loan and how the loan is going to help the business to grow.

The SBA website is the best place to find information about these processes and activities.

With the recent economic recession, lot of businesses has changed their strategy towards the export market. It is no doubt this would be ideal move.

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