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RECAP: Access to Capital: Food Beverage & Agricultural Enterprises
January 07, 2015 Gregory Smith, Regional Director for New England, Small Business Group

Did you know that the Export-Import Bank of the United States (Ex-Im Bank) regularly works with other federal agencies, in addition to local city and state economic development entities, to organize informational events to provide business advice and resources to U.S. exporters?

These events are attended by Ex-Im Bank personnel, from one of our 12 regional offices. Along with my colleagues across the United States, we make ourselves available to U.S. businesses to answer questions and provide advice on how to access financing required to do business overseas, either via panels or even sometimes through one-on-one sessions.

The U.S. Small Business Administration (SBA) and the U.S. Federal Reserve Bank of New York recently put on one such event, “Access to Capital: Food, Beverage and Agricultural Enterprises.” The event took place at the New York State Fairgrounds in Syracuse, N.Y., and was geared towards small businesses in the Food, Beverage and Agricultural Sector seeking advice on how to increase their international sales.

During the event, business leaders were able to get answers to their questions from experienced panelists from the U.S. Department of Commerce, J.P. Morgan International Development, New York State’s Empire State Development, Central New York International Business Alliance, the SBA, and Ex-Im Bank

Two questions I had the pleasure of addressing were:

(1.) How can my business obtain funding to grow my export business?

and

(2.) How can I offer my foreign buyers credit terms, when I am only comfortable using Letters of Credit or requiring cash in advance payment?

These two concerns are often at the forefront of exporters’ minds.

Many business leaders I speak with have difficulty obtaining financing through their traditional bank (commercial lender) to access pre-export working capital for international sales. Other businesses who have traditionally required cash in advance payment are concerned about offering more competitive credit terms to foreign buyers.

Ex-Im Bank offers a variety of programs and tools to: (a) help U.S. businesses obtain the finance they require to grow their export business; and, (b) offer credit terms to foreign buyers to win more international sales.

Specifically, the Ex-Im Bank Working Capital Guarantee Program and Global Credit Express product allow U.S. businesses to access working capital to grow their U.S. export business. With the Working Capital Guarantee, Ex-Im Bank works with a business’ commercial lender to offer a guarantee for any loan that the lender provides to a U.S. business used to finance export sales, including payment for materials, equipment, labor, and other factors that go into making and exporting a business’ products. Global Credit Express, on the other hand, is a product that Ex-Im Bank offers directly to creditworthy small businesses that need to access capital, but are unable to do so through the private sector. Applying through Ex-Im Bank, qualified U.S. businesses can access a line of credit up to $500,000.

Meanwhile, Express Credit Insurance and Small Business Multi-Buyer Insurance policies grant U.S. businesses the confidence to offer flexible credit terms to their foreign buyers—with the added benefit of having no application fee, no deductible and requiring payment of a premium only upon shipment. Express Credit Insurance and Multi-Buyer Credit Insurance are two types of export credit insurance that Ex-Im Bank, along with its dedicated private sector insurance brokers, offers to insure U.S. business’ foreign accounts receivable. By insuring foreign accounts receivable, a business is often able to access better credit terms from their commercial lender. They also are more willing to offer increased flexible credit terms to their foreign buyers knowing that should a foreign buyer default, they will be compensated for 95% of any commercial losses due to insolvency, bankruptcy, and default, or political losses due to war, revolution, cancellation of import or export licenses, and currency inconvertibility.

I am always happy to attend events such as “Access to Capital: Food, Beverage and Agricultural Enterprises.” The experience is always both enlightening and rewarding, principally in meeting experienced export professionals both from the public and private sectors.

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