Transitioning your company into exports can be an exciting prospect, but putting together the financing that you need is a roadblock that many businesses face. Whether you’re already established as an exporting business or you’re looking to get started, there are ways to solve you financing problems. Learn about different types of export financing so you can have the capital and assistance you need to be successful.
Working Capital Loans
For small businesses, a working capital loan can be a great option. This can be used to grant you pre-export financing, which will pay for materials and labor to help facilitate exporting. On the other hand, a working capital loan could facilitate post-shipment financing instead. This is based on your accounts receivable and your transaction-specific overseas sales.
That’s something that you should keep in mind. Working capital loans are based on your accounts receivable, and they are often transaction-specific. However, they are short-term loans, which can be a great benefit if you don’t want to be paying back a loan for an extended period of time. As an added bonus, decisions regarding working capital loans tend to be quite fast. You could potentially go from applying for the loan to having money on hand in the same week.
Trade Loan Programs
Trade loan programs are targeted and fairly specific. The whole purpose of this sort of financing is to help U.S. businesses improve or expand facilities that will be used to produce goods, which are themselves involved in international trade. In short, this means that any sort of construction, modernization, renovation, or acquisitions that may be needed can be funded through a trade loan program. This is a great choice for a company that is looking to get involved in international trade, but doesn’t currently have the resources or facilities to make it happen. It should be noted that trade loan financing cannot be used as working capital.
Both trade loans and working capital loans tend to be ideal for short-term needs. For long-term expansion or development, you’ll need something else. Project financing is one such option. This enables U.S. businesses to gain financing for larger projects, which are generally medium to long term. These projects include far more in depth and expansive endeavors, such as the development of infrastructure. Your company could use project financing to help construct housing, expand and establish telecommunications, or even build airports and hotels. You should be aware that project financing is typically targeted at developing countries and emerging markets, so it won’t be applicable in all cases.
For most small companies, working capital loans and trade loan programs are good avenues to pursue, although they won’t cover all possible scenarios. You might also consider partnering with a factoring company in Waukesha, WI, to help your business gain capital quickly without going into debt.