Finance for Small Businesses

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Export and Local Financing for Small Businesses

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If you're considering or engaged in exporting or international trade, the SBA and other sources can help you secure financing. And regardless of your exporting ambitions, don't forget to tap into state and local financing.

Fancy yourself as an exporter? The SBA and several other government agencies offer special financing programs. Note, however, that while exporting may offer tremendous market potential for certain small companies, there will be additional research and preparation expenses necessary for developing and implementing an international business plan.

Preparing to Export

Like tapping into any new market, you have to pay to play. You'll need to consider the costs for:

  • multinational legal compliance (labeling, packaging, product safety and liability laws, etc.)
  • additional promotional material for different countries and languages
  • transportation costs for product/service delivery and personnel travel
  • any required export licenses

Help in preparing your plan, and in finding more information about exporting, can be obtained through:

  • the SBA and federal Department of Commerce assistance programs
  • state commerce departments
  • local chambers of commerce
  • international trade associations
  • export management and trade companies
  • private consulting firms

The SBA's financing programs include the Export Working Capital Program, the Export Express Program and the International Loan Program.

Financing Through the SBA's Export Working Capital

This program provides short-term financing guarantees on loans for specific export needs. The loans can be structured as revolving lines of credit or term loans, or be tied to a specific contract or cash cycle. 

During its relatively short existence, the program has been used almost exclusively for short-term credit of one year or less, with revolving lines constituting approximately two-thirds loan guarantees. Borrowers have generally been either manufacturers or wholesalers.


Unlike most SBA loan guarantee programs, the interest rate and loan fees charged by a conventional lender for an Export Working Capital Loan are not regulated by the SBA. To your advantage, the terms are entirely negotiable between the lender and borrower.

Financing Through Export Express

To encourage lenders to make loans to small business exporters that they might not make on their own, the SBA developed the Export Express Program. The guaranty is 85 percent up to $150,000 and, since the SBA recently included additional 2,400 lenders, they've also increased the maximum loan under this program to $250,000, for which they will guarantee 75 percent. Like pursuing any SBA loan, verify the Export Express details before pursuing it in earnest.

Financing Through the SBA's Export Working Lines of Credit Program

The Export Working Lines of Credit Program (EWCP) is available only to small businesses that have been in business, although not necessary exporting, for at least one year. 

EWCP funds can be used for:

  • pre-export costs of labor and materials
  • financing receivables from sales
  • standby letters of credit used as performance bonds or payment guarantees to international buyers. 

The maximum guarantee is 90 percent up to $1.5 million. More detailed EWCP information can help you determine your eligibility.

Whether you borrow money to help your exporting or not, technical assistance in marketing and management is provided by SBA's U.S. Export Assistance Centers and the SBDC system.

Considering the International Trade Loan Program

The International Trade Loan Program (ITLP) helps small businesses engaged or preparing to engage in international trade, as well as small businesses adversely affected by competition from imports. This program has not been used by small businesses as much as the Export Working Capital Loan Program. The Section 7(a) loan guarantee program is probably being used in lieu of this program for capital needs under $1 million.

Qualifying for the ITLP

Beyond meeting the general eligibility criteria for a SBA loan guarantee, if you apply for for the ITLP, you must establish either of the following:

  • The loan proceeds will significantly expand existing export markets or develop new export markets. You must submit a business plan, including sufficient information to reasonably support the likelihood of expanded export sales. The plan must include both a profit and loss projection and a narrative rationale.
  • You are adversely affected by import competition, and you can demonstrate injury attributable to increased competition with foreign firms must be demonstrated. A narrative explanation and financial statements must show that directly competitive imported products have made an important contribution to a decline in the firm's competitive position. This can be demonstrated by factors such as a decline in sales or production or underutilization of capacity, decreased profitability or the threat of (or actual) loss of production employees.

The SBA can guarantee up to 90 percent of a loan up to $5 million. 

The loan proceeds may be used for:

  • acquisition
  • construction
  • renovation
  • modernization
  • improvement
  • expansion
  • repaying an existing loan

To ensure you qualify, visit the SBA's International Trade Loan Program webpage.

State and Local Public Funding for Small Businesses

In an effort to improve their local economies, most states—and many municipalities and counties—sponsor a variety of public funding sources for small business concerns. At the state level, nearly all states provide some form of state economic development agency and/or state finance authority that make loans or loan guarantees to small businesses.

Finding Financing from Your State

State Commerce Departments often offer direct or participating loan programs that may be even more attractive than SBA-guaranteed loan programs.

Although state programs and funding options vary, many offer a participating loan arrangement in which the state pools its public funds with money from a conventional lender to meet the needs of a small business borrower.


Some states loan up to 25 percent of the total cost of a small business project, with a maximum loan of $750,000. Let's say you needed a $100,000 loan but a bank would lend only $75,000. The state "participates" in the loan by contributing public funding of $25,000 to the total loan package. The bank then processes the total loan of $100,000. The state is spared the administrative expenses of loan processing and the bank receives a priority lien on collateral.

States sometimes receive federal money through block grants that can be used for a variety of local improvements, including small business financing programs. 

Urban development spending for larger cities, or smaller city community assistance programs, are oft-used purposes for the federal money. While the criteria for a small business to obtain a loan of grant money varies between states, the state will typically expect owner equity participation and evidence that a clear economic or social benefit to the local community will result from the funding. The amount of money made available at the local level will usually depend upon the perceived need for job creation in the area and the relative income level of that community.

Keeping Funding Local

The state isn't the only public entity looking to better its community. County and municipal governments often lend small amounts of capital to local businesses. 

These local microloan programs may be characterized by minimal (and sporadic) funding, so the timing of your request can be critical. Contact local agencies as soon as possible, even if you don't need the money immediately, to determine the available funds at that time and when the program is expected to receive any additional money. 

Local programs can lend small amounts of money, e.g., under $10,000, for working capital, equipment or inventory purchasing, or property improvements.

Checking with Private Community Investors

Finally, don't forget to check local colleges, universities or trade schools to see if they have any small business assistance programs. 

Some institutions, with the help of public funding, provide business "incubator" programs that can include consulting, marketing, services, facilities and financing opportunities to local businesses as part of the institution's business education program.

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