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What are SBA International Trade Loans?
SBA International Trade Loans can provide much-needed financing for small businesses expanding export operations, so long as they work to improve or expand operations in the U.S.
SBA International Trade Loans (ITLs) are a form of SBA-guaranteed export financing. These loans are available for businesses who are involved in producing goods in the U.S. that will be involved in international trade, or to support businesses that have been negatively affected by international trade in recent years.
SBA International Trade Loans have a maximum loan amount of $5 million, and provide the lender with a 90% loan guaranty.
What Are the Eligibility Requirements for International Trade Loans?
In general, borrowers applying for an SBA International Trade Loan need to first be eligible for a standard SBA 7(a) loan. This means that they must be a U.S.-based, for-profit business, must have good credit and strong financials, and need to conform to the SBA size standards for their particular industry.
However, International Trade Loans must also specifically be used to “acquire, construct, renovate, modernize, improve or expand facilities and equipment to be used in the United States to produce goods or services involved in international trade.” Other eligible uses involve bringing back production facilities to the U.S. (i.e. repatriation), working capital financing, and refinancing any eligible business debt that is currently offered to the borrower on unreasonable terms.
Additionally, eligible borrowers must show that they are capable of expanding their business into current export markets, or alternatively, that they can develop new markets. SBA International Trade Loans are also available to businesses who can show they they have been hurt by international trade, and can effectively demonstrate that getting SBA financing can make them more competitive.
What Are The Terms for SBA International Trade Loans?
The terms for SBA International Trade Loans are quite similar to the terms for standard SBA 7(a) loans, and include:
Loan Amount: $5 million maximum
Guaranty Amount: 90%
Interest Rate: 6.75% - 9.25% (2.25% to 4.75% above Prime Rate)
Loan Term:
Up to 7 years for lines of credit
Up to 10 years for equipment and working capital
Up to 25 years for commercial real estate
Collateral: Must be U.S.-based equipment, property, or business assets (first and second liens allowed)
What are the eligibility requirements for SBA International Trade Loans?
In general, borrowers applying for an SBA International Trade Loan need to first be eligible for a standard SBA 7(a) loan. This means that they must be a U.S.-based, for-profit business, must have good credit and strong financials, and need to conform to the SBA size standards for their particular industry.
However, International Trade Loans must also specifically be used to “acquire, construct, renovate, modernize, improve or expand facilities and equipment to be used in the United States to produce goods or services involved in international trade.” Other eligible uses involve bringing back production facilities to the U.S. (i.e. repatriation), working capital financing, and refinancing any eligible business debt that is currently offered to the borrower on unreasonable terms.
Additionally, eligible borrowers must show that they are capable of expanding their business into current export markets, or alternatively, that they can develop new markets. SBA International Trade Loans are also available to businesses who can show they they have been hurt by international trade, and can effectively demonstrate that getting SBA financing can make them more competitive.
What types of businesses are eligible for SBA International Trade Loans?
In general, businesses applying for an SBA International Trade Loan need to first be eligible for a standard SBA 7(a) loan. This means that they must be a U.S.-based, for-profit business, must have good credit and strong financials, and need to conform to the SBA size standards for their particular industry.
What are the benefits of SBA International Trade Loans?
SBA International Trade Loans offer a number of benefits to eligible borrowers. These include loan amounts of up to $5 million, an SBA guaranty of 90%, and repayment terms of up to 25 years. Additionally, ITLs can be used to acquire, construct, renovate, modernize, improve or expand facilities and equipment to be used in the United States to produce goods or services involved in international trade. Other eligible uses involve bringing back production facilities to the U.S. (i.e. repatriation), working capital financing, and refinancing any eligible business debt that is currently offered to the borrower on unreasonable terms.
In comparison, Export Working Capital Loans offer loan amounts of up to $5 million, with an SBA guaranty of 90%, but have a maximum repayment term of 3 years. Export Express Loans, which are designed to be approved in as little as 24 hours, have a maximum loan amount of $500,000, an SBA guaranty of 75%, and the same repayment terms as ITLs.
What are the terms and conditions of SBA International Trade Loans?
The terms for SBA International Trade Loans are quite similar to the terms for standard SBA 7(a) loans, and include:
Loan Amount $5 million maximum Guaranty Amount 90% Interest Rate 6.75% - 9.25% (2.25% to 4.75% above Prime Rate) Loan Term - Up to 7 years for lines of credit
- Up to 10 years for equipment and working capital
- Up to 25 years for commercial real estate
Collateral Must be U.S.-based equipment, property, or business assets (first and second liens allowed) In general, borrowers applying for an SBA International Trade Loan need to first be eligible for a standard SBA 7(a) loan. This means that they must be a U.S.-based, for-profit business, must have good credit and strong financials, and need to conform to the SBA size standards for their particular industry.
However, International Trade Loans must also specifically be used to “acquire, construct, renovate, modernize, improve or expand facilities and equipment to be used in the United States to produce goods or services involved in international trade.” Other eligible uses involve bringing back production facilities to the U.S. (i.e. repatriation), working capital financing, and refinancing any eligible business debt that is currently offered to the borrower on unreasonable terms.
Additionally, eligible borrowers must show that they are capable of expanding their business into current export markets, or alternatively, that they can develop new markets. SBA International Trade Loans are also available to businesses who can show they they have been hurt by international trade, and can effectively demonstrate that getting SBA financing can make them more competitive.
How can I apply for an SBA International Trade Loan?
You can apply for an SBA International Trade Loan by meeting the eligibility requirements for a standard SBA 7(a) loan. This means that you must be a U.S.-based, for-profit business, have good credit and strong financials, and conform to the SBA size standards for your particular industry. Additionally, you must show that you are capable of expanding your business into current export markets, or alternatively, that you can develop new markets. You must also use the loan proceeds to “acquire, construct, renovate, modernize, improve or expand facilities and equipment to be used in the U.S. to produce goods or services involved in international trade.”
You can find more information about the Export Express Loan program, which is a type of SBA International Trade Loan, here. To be eligible for this loan, you must have been in operation for at least 12 full months, the loan proceeds must allow the business to enter a new export market or expand an existing export market, and the proceeds must be used for an export development activity. Additionally, you must provide certification from the applicant’s domestic customer that the goods or services are in fact being exported, and the loan will not refinance an existing SBA-guaranteed loan.
What Are The Other Kinds of SBA Export Loans
In addition to International Trade Loans, the SBA also offers two other kinds of SBA loans specifically intended for U.S. firms involved in exporting goods to other countries, the Export Working Capital Program (ECWP), and the Export Express Loan. Just like International Trade Loans (ITLs), Export Working Capital Loans offer loan amounts of up to $5 million, with an SBA guaranty of 90%. However, ECWP loans have a maximum repayment term of 3 years, making them significantly less flexible than ITLs.
In comparison, Export Express Loans, which are designed to be approved in as little as 24 hours, have a maximum loan amount of $500,000, an SBA guaranty of 75%, and the same repayment terms as ITLs.
Case Study: Building an Export Business in Pennsylvania
Alwen, the owner of a small manufacturing business in King of Prussia, Pennsylvania, was eager to expand her company's operations and tap into the international market. Her company specialized in producing high-quality, eco-friendly consumer goods that were gaining popularity among environmentally conscious consumers. Alwen believed that her products had strong potential in overseas markets and wanted to secure financing to help her achieve this goal.
After researching various financing options, Alwen learned about the SBA International Trade Loan (ITL) program, which seemed like a perfect fit for her business. She decided to apply for an ITL of $1.5 million to invest in upgrading her manufacturing facilities, purchasing advanced equipment, and establishing a strong presence in the targeted international markets.
In her loan application, Alwen provided detailed information about her company's current operations, financial performance, and growth potential in the overseas markets. She also developed a comprehensive international expansion plan, highlighting how the funds would be used to modernize and expand her manufacturing facilities and invest in marketing efforts to reach new customers abroad.
Additionally, Alwen demonstrated her company's ability to compete in the global market by showcasing her eco-friendly products' unique features and benefits. She also presented a strategy to develop new relationships with international distributors and suppliers, which would help her business grow further.
Upon reviewing Alwen's application, the SBA approved her International Trade Loan request. With the funds secured, she proceeded to implement her expansion plan, upgrading her manufacturing facilities, and investing in targeted marketing campaigns. As a result, Alwen's business flourished in the international market, creating new jobs in her community and contributing to the local economy.
This is a fictional case study provided for illustrative purposes.
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