Independent Banker - September 2018 - 27

Next: How not to burn out as a leader
the SBA or the Export-Import Bank of the United States
(EXIM). Because community banks are already familiar with
SBA, they will work with SBA programs in their export financing
efforts, rather than EXIM.
In addition to the EWCP, SBA offers the Export Express
and International Trade Loan (ITL) programs. With loan
amounts capped at $500,000, Export Express is the smallest
program, guaranteeing 90 percent for loans up to $350,000
and 75 percent for loans up to $500,000.
Both the ITL and the EWCP have limits of $5 million, with
a 90 percent guaranty for all loans. With EWCP, financing
is tied to a specific transaction, whether receivables or contracts,
while the ITL provides term loans, usually for fixed
asset financing.
To further mitigate the risks associated with exporting,
some borrowers purchase credit insurance, either through
the EXIM or through private firms, such as Atradius or
Euler Hermes. For a modest premium, insurers underwrite
the transaction. If it fails, they reimburse the exporter for 98
percent of the amount invoiced. " With loan guarantees and
insurance on foreign receivables, the accounts receivable
on export transactions are actually more secure than many
domestic receivables, " says Bryson Patterson, SBA regional
export finance manager, Denver.
Finding a niche
With the risk of international trade mitigated, community
banks are poised to reap benefits, starting with an ability
to differentiate themselves. Cody Jarrett, SBA operations
manager of $350 million-asset First Utah Bank in Salt Lake
City, recounts the bank's experience with a hay broker who
buys from producers in the intermountain west and sells
to markets in China. The broker only found a few financial
institutions in Utah that could offer export financing.
" Export financing is a sticky product, " Jarrett says. " There
are not as many banks doing it in the market. So, if you can
get a customer on board, they won't move financial institutions
too easily. "
The success of the exporter ripples across the community.
" It creates stabilized hay prices for the local community, and
because the international demand drives the hay prices up,
farmers get a better price for their hay, " Jarrett explains.
Banks new to export financing, especially those with limited
SBA experience, will undergo a learning curve with the
process. " It's a little more paperwork than conventional
credit, " Patterson acknowledges.
However, in addition to the 68 SBA district offices, bankers
can take advantage of 21 U.S. Export Assistance Center
offices (USEACs) around the United States that are positioned
to work with community banks. " Most community
" Export financing is a sticky
product. ... So, if you can
get a customer on board,
they won't move financial
institutions too easily. "
-Cody Jarrett, First Utah Bank
banks don't have someone on staff with an international trade
background, " Patterson notes. " We'll walk them through the
SBA process and what to do to protect the transaction. "
The growth of export financing reflects the growing globalization
of the economy. " The Utah legislature just approved
making Salt Lake City an inland port, " Jarrett observes. " As
the state becomes more global, we have to look at a more
global perspective. This is another arrow in the quiver we
can offer to small businesses. "
Export financing may be unfamiliar, but it can open up
new markets to community banks and their clients. " We
don't want people to pass on opportunities, " Patterson
stresses. " We want them to take those opportunities and
make those sales. "
Judith Sears is a writer in Colorado.
Get started in export financing
Find out who's exporting, how much and what
in your area:
bit.ly/whosexporting
Get help navigating government agencies:
bit.ly/navigategov
Find trade specialists near you:
bit.ly/exportlenders
EXIM export finance products:
bit.ly/bankexportproducts
SBA programs:
bit.ly/sbaexportexpress
bit.ly/SBAprogram
independentbanker.org Q 27
http://www.bit.ly/whosexporting http://www.bit.ly/navigategov http://www.bit.ly/exportlenders http://www.bit.ly/bankexportproducts http://www.bit.ly/sbaexportexpress http://www.bit.ly/SBAprogram http://www.independentbanker.org
Independent Banker - September 2018

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