Related Article: Uncle Sam Lends a Financial Hand (PDF)
In international trade, problems involving bad debts are more easily avoided than rectified after they occur. Credit checks and services such as the international company profile can also limit the risks. Export.gov has a section on payment disputes that can assist in locating the proper assistance center.
The Export-Import Bank's working capital financing provides companies with the liquidity to accept new business, grow international sales and compete more effectively in the international marketplace. The working capital loans are made by commercial lenders and backed by the agency's guarantee.
Importantly, for letters of credit issued under the guaranteed loan, Ex-Im Bank only requires collateral for 25% of the value of the letter of credit. Furthermore, for eligible U.S. exports, the collateral coverage is at generous rates (inventory up to 75% advance rate including work-in-process and foreign accounts receivables up to 90%). We encourage you to first contact an authorized lender for details.
There are a number of prudent credit practices. The common practices are listed below in the order of most secure to least secure:
1. Cash in advance;
2. Documentary letter of credit;
3. Documentary collection or draft;
4. Open account; and
5. Other payment mechanisms, such as consignment sales.
The Basic Guide to Exporting describes each of these practices in greater detail.
There are two types of financing programs that help exporters finance their costs related to exporting: Working Capital Programs and the International Trade Loan Program. These programs and other financing ideas are available in “How can I finance some of my costs related to exporting?” (PDF) and in the International Financing portion of the Export.gov website.
The SBA Export Express program provides exporters and lenders a streamlined method to obtain SBA backed financing for loans and lines of credit up to $250,000. Lenders use their own credit decision process and loan documentation; exporters get access to their funds faster. The SBA provides an expedited eligibility review and provides a response in less than 24 hours.
Trade Specialists at 1-800-USA-TRAD(E) can help small businesses navigate sources of U.S. government export financing programs. The most significant financing assistance programs include the following:
These programs are described better on the “How can I find export financing?” page on Export.gov.