How to Qualify for SBA Export Loan Programs

This article will help you learn more about qualifying for SBA export loans and how your business can benefit from them.

When it comes to export funding, conventional banks are typically uncooperative with businesses. This is often the case because financial institutions see the risk of financing exports as too great to justify the reward. Three loan programs available via the Small Business Administration (SBA) are geared toward American exporters. The SBA export loan guarantees were established to assist bridge the financing gap caused by the fact that most banks do not advance funds against international receivables. The programs are specifically made for small businesses in an effort to facilitate their international growth via the penetration of new markets or the development of current ones. This article will help you learn more about qualifying for SBA export loans and how your business can benefit from them.

SBA export loan programs

Small businesses may mistakenly feel that exporting goods is solely an option for large corporations, however, this isn’t true. Small companies are the focus of SBA Export loan programs, and the SBA aims to support them as they increase their exports by establishing new markets or growing in already existing ones. These loans could be worthwhile to pursue since SBA wants to see U.S. exports increase via small companies. Let’s learn about them in detail.

What is an SBA export loan?

SBA export loans are financial loans that are backed by the Small Business Administration. SBA Export Loans are guaranteed up to 90% of the loan amount, which is much higher than the typical SBA loan guarantee range of 50%-75%. Export loans, however, operate in tandem with a conventional lender and the SBA, as do all SBA loans. SBA Senior International Credit Officers are located at U.S. Export Assistance Centers all around the country. Direct and indirect exports may both be financed via the three different SBA export loan programs. Examples of indirect exports include tourism and the selling of products to local consumers who export them.

Types of SBA export loan programs

There are three types of loans included in the SBA export loan program. Each export loan was developed to fund certain export-related projects. Let us understand them in detail:

Types of SBA export loan programs

  • Export express loan – The SBA’s Export Express loan program is the most straightforward option for international trade financing. It’s a funding option with a cap of $500,000.
  • Export working capital loan – Through finance export operations from purchase orders to collections, the Export Working Capital Program (EWCP) offers loans of up to $5 million. Low guarantee fees and speedy processing are two benefits of this loan.
  • International trade loan – Small enterprises who want to begin or continue exporting may apply for up to $5 million in working capital and fixed assets under the International Trade Loan Program.

Uses of SBA export loan

All three different SBA export loans have different uses. They can be used to fund direct expenses or even indirect export undertakings. Let’s see the uses of each type of SBA export loan.

Export Express LoanExport Working Capital LoanInternational Trade Loan
  • The revenues of a loan may be used to commercial endeavors that support an organization's export growth.

  • Money could be used to support standing lines of credit, attend a foreign trade exhibition, and translate product material for international.

  • Additionally, funds may be utilized to finance particular export orders, increase manufacturing capacity, buy inventory or real estate, and develop production facilities.

  • A term loan or an open-ended line of credit may be used for Export Express.
  • Financing towards the creation of export-oriented products or services, inventories, works in development, or suppliers.

  • Working capital for protracted payment cycles to support international accounts receivable.

  • Funding for standby letters of credit that are utilized as down payment assurances, bid or performance bonds, or both.
  • Borrowers may utilize loan funds to build, upgrade, or extend facilities and equipment that will be used in the United States to manufacture products or provide services for international commerce as well as to grow into and enter foreign markets.

  • A current debt might potentially be refinanced using the funds.
  • SBA Export loan terms, rates and loan amount

    Below is a summary of the maximum loan amount, percent of guaranty and use of proceeds of the different SBA Export Loan Programs:

    Loan TypeMaximum Loan AmountPercent of GuarantyUse of Proceeds
    Export Express Loan$500,000
  • 90% guaranty for loans of $350,000 or less

  • 75% guaranty for loans above $350,000
  • Same as SBAExpress plus standby letters of credit
  • Export Working Capital Loan$5 million
  • 90% guaranty (up to $4.5 million maximum guaranty)
  • Short-term, working capital loans for exporters

  • May be transaction based or asset-based

  • Can also support standby letters or credit
  • International Trade Loan$5 million
  • 90% guaranty (up to $4.5 million maximum guaranty)

  • For working capital, up to $4 million maximum guaranty
  • Term loan for permanent working capital, equipment, facilities, land and buildings and debt refinance related to international trade
  • Eligibility criteria for SBA expert loan

    SBA export loans are subject to the same eligibility standards as other SBA loans. The SBA export loan programs have extra requirements and are open to businesses engaged in any export-related activity.

    For export express loan

    You must be joining or growing in an established international market, have been in business for a minimum of a year, and not be funding offshore activities. You must submit a thorough export business plan outlining how you will utilize the loan money as well as projecting your first-year export sales. If the firm’s core individuals have proven export knowledge and prior profitable business history, the one-year in business requirement may be removed.

    For export working capital loan

    Prior to applying, applicants must have at least 12 months of operational experience; however, if you have proven export competence and prior business experience, this requirement may be removed.

    For international trade loan

    Businesses must demonstrate that the loan will help them enter or expand into an export market, that import competition has injured them, or that the loan would help them become more competitive. You can be asked to submit an export strategic plan with financial projections and predicted export sales.

    Business valuation required

    No matter what kind of SBA loan one seeks, an independent business valuation is need when

    • more than $250,000 is being funded minus the assessed value of any real estate or equipment; or
    • the buyer and seller have a tight connection

    Also, the following additional valuation standards are listed:

    • The lender is required to obtain the valuation. (A broker may suggest a valuation specialist as long as the broker does not employ the valuator directly.)
    • Neither the buyer nor the seller’s valuation should be used by the lender (although they can pass on the cost to the buyer).
    • The spectrum of service parameters for the valuation assignment should specify whether the transaction involves the acquisition of an asset or shares and be detailed enough for the valuator to understand what is included in the transaction (with assumed debt, if any).
    • The valuator’s judgment of worth, credentials and a signature testifying to the information included in the valuation are all required to be included in the valuation report.
    • The lender needs a copy of the valuation expert’s financial records to cross-reference them with the seller’s IRS records.• In line with relevant standards, the valuation report must arrive at a final result of worth rather than a calculated value.

    How to apply for SBA export loan programs?

    Your loan application form must be accompanied by a number of papers, including details of ownership and affiliates, prior SBA loan applications, employee numbers, and job creation. Lenders often want copies of your business strategy, tax filings, and past and future financial reports. Here is a brief summary of the SBA Export Loan application procedures

    • Export express loan – Fill out the SBA’s Borrower Information Form (SBA Form 1919) and the lender’s requirements to submit an application directly to an SBA Express lender. The National Loan Processing Center of the SBA receives accepted applications from lenders and responds with a decision within 24 hours, indicating financing will be available within one week.
    • Export working capital loan – The SBA advises getting in touch with its employees at a U.S. Export Assistance Center (USEAC) to explore the requirements and appropriateness for the loan before submitting an application to the program. After reviewing and approving the application, the collaborating lender sends the guarantee claim to the SBA USEAC office in charge of the exporter’s area. To apply, you must submit a finished Form SBA-EIB 84-1 along with any required attachments or SBA paperwork. Within five to ten business days, the SBA announces its application decision.
    • International trade loan – The borrower submits an application to an SBA-approved lender by completing all lender’s required paperwork. Generally speaking, the SBA’s International Trade Loan (ITL) loan program and SBA 7(a) lending programs both need the same paperwork. This might contain the Personal Financial Statement (Form 413) and Borrower Information Form (Form 1919). If you assert that import competition has negatively impacted your business, you must provide evidence of both the impact’s nature and how the loan will boost your ability to compete. Typically, the SBA will make a determination within five to ten business days.

    Tips for boosting small business export

    Getting a thorough valuation for applying for SBA loan is a requirement; however, it can also help you understand the value of your owned assets and fill the details in the forms they require. Additionally, when applying for an international trade loan, a valuation can help explain the negative impact of competition or the situation if you wish to assert it.

    Due to the independence requirement, it is dangerous to rely on appraisals conducted by brokers or other parties that have a stake in the success of the transaction. One who routinely obtains remuneration for company appraisals or one of the following qualifies as a qualified source.

    • Does the valuation in compliance with the AICPA’s Standards for Valuation Services as a certified public accountant (CPA).
    • Has a certificate in valuation, such as Accredited Senior Appraiser (ASA), Certified Business Appraiser (CBA), Accredited in Business Valuation (ABV), or Certified Valuation Analyst (CVA).

    Verifying the independence and credentials of your valuation specialists is crucial if your customers are participating in acquisitions funded by SBA-guaranteed loans. Complete the valuation beforehand in the talks as well as speed up the acquisition and the SBA approval procedure.

    Get a business valuation to qualify for an SBA export loan with Eqvista!

    Small Business Administration export loan programs allow owners of small export businesses to get excellent financing. However, to verify your eligibility, you must submit plenty of documentation. The application procedures for the loans are lengthy and contain strict restrictions. You do not want to make it take longer by putting incorrect information in the documentation. A team of professionals at Eqvista can help the company appraise necessary SBA loans, which are much more effective and simple to get for every sector. Contact us right away if you want to work with us.

    Interested in issuing & managing shares?

    If you want to start issuing and managing shares, Try out our Eqvista App, it is free and all online!