No one is too small to trade - let's talk finance!
International trade and finance shape the everyday material life of people in the United States. The way in which goods, services, and money move across the globe is determinant for the success of American industries and agriculture, household financial security, as well as the availability of goods and services, the strength of our currency, as well as the health of the global economic environment.
Although precise figures on its magnitude are unavailable, in 2009 the World Trade Organization estimated that between 80% to 90% of all world trade was financed. In other words, trade finance serves as the lifeblood of the day-to-day international trade in goods and services by enabling transactions between buyers and sellers around the globe.
COMMON FINANCE INSTRUMENTS
Export Credit Insurance: Insurance that provides conditional assurance to an exporter of a product or service that payment will be made if the foreign buyer is unable to pay.
Letters of credit (LC): A commitment by a bank on behalf of the buyer that payment will be made to the seller, provided that the terms and conditions stated in the LC have been met. LCs are one of the most secure instruments available to international traders.
Export Working Capital Financing: allow small business owners to apply for loans in advance of finalizing an export sale or contract, giving exporters greater flexibility in negotiating export payment terms.
Performance Bonds (or contract bonds): Bonds issued to one party of a contract (usually by a bank or insurance company) as a guarantee against the failure of the other party to meet obligations specified in the contract.
FEDERAL PROGRAMS AND RESOURCES
Explore these federal programs and resources designed to help SMEs not only break into the international marketplace, but also excel in it!
SBA Office of International Trade (OIT) which provides tools, services, advocacy, and counseling for SMEs.
Export Finance Programs: SBA reduces lender risk through the export finance programs, making capital for international sales efforts more accessible, these instruments include:
Export Express Loans
Export Working Capital Loan
International Trade Loan
Just last year the SBA guaranteed $423 million in financing to small business exporters that supported more than $1.6 billion in export sales.
EXPORT IMPORT BANK OF THE UNITED STATES
The Export-Import Bank of the United States (EXIM) is the official export credit agency in the country with a mission of supporting American jobs by facilitating the export of U.S. goods and services.
Especially for small businesses when private sector lenders are unable or unwilling to provide financing, EXIM fills in the gap by equipping them with the financing tools necessary to compete for global sales. They provide a wide range of instruments to protect from commercial or political risks, access to cash flow, or help with credit terms.