Thrush Aircraft’s 215 employees manufacture agricultural and firefighting aircraft in Albany, Georgia. Thrush is a small business that makes a big ticket item, and 85 percent of the company’s sales are to international buyers. Cash is king in most small businesses, but financing airplanes takes it to a whole new level.
The first challenge is working capital. Building airplanes is expensive – engines, airframes and component parts cost a lot. On top of that are the expenses associated with operating in a regulated industry. The second challenge is that while the working capital requirements can be tough for small companies, the numbers are not big enough to interest most commercial banks. Basically, the company is not asking for enough money to make large banks take notice. The company needs cash to build first-class aircraft, but many banks don’t want to loan the money.
The third challenge is that most countries Thrush is selling into don’t have good financing options. Asking customers to pay cash up front is possible, but it severely restricts your market. The issue is that the company purchasing the plane may not have access to financing at reasonable rates. The financing rates from commercial banks in one market that Thrush sells into are 16, 18 and sometimes 20 percent per year and that’s just not feasible. Customers will cancel or delay purchasing when the cost of capital is too high.
As Arthur Lorga, Thrush Aircraft Vice President of Product Financing points out, “Thrush Aircraft is an aircraft manufacturer. We want to focus on our core business. We’re not a bank, we’re not a financial institution and we don’t want to put our resources into financing customers. We want to deliver the best aircraft we can to our customers. That’s where we should put our energy, that’s where we should put our resources.”
Thrush Aircraft uses two EXIM Bank products, the working capital loan guarantee and medium-term insurance, to build and sell aircraft to international buyers. With a working capital loan guarantee from EXIM Bank, Thrush has access to cash to build the aircraft that fulfill international orders.
The medium-term insurance empowers Thrush to offer its foreign buyers credit terms, and assists the company in expanding its reach to new customers and into new markets. “The aircraft will pay for itself,” says Mr. Lorga. “The work of the aircraft is enough to pay the loan. So, the customers just need a little bump, and that’s what EXIM Bank gives us.”
Interested in learning how a working capital loan guarantee and export credit insurance can fuel your export business? Download these e-books, and then contact us. When asked what advice he has for other small businesses Mr. Lorga replies, “My advice for other small businesses is to call your local EXIM Bank office. Talk to them. They’re really able to help.”