5 Ways to Fund Future Global Business Growth for Your Small Business

MC_Default_BusinessPlanningOf the world’s 7 billion people, 2.4 billion of them are online, according to Internet World Stats. And, thanks to the Internet, that market is right at our fingertips. Selling to even a small fraction requires a creative financing strategy. Whether your company is exporting, in need of working capital or a line of credit, these five funding alternatives will help you land overseas business, expand profitably and minimize risks.

1.  Payment in Advance
Let’s start with the easiest way of funding global business growth. To get cash in advance, you must ask. Let’s say a customer in Thailand wants to import 10,000 of your picture frames. You prepare a detailed pricing proposal showing all costs involved. Within the proposal you state in bold letters: Method of Payment: Wire transfer in advance for full amount of order and payable in U.S. dollars. Your customer wire transfers the full cost of the transaction plus your profits.  A small wire transfer fee may apply. You not only fronted the funding on the production of goods, but you also have a healthy profit margin to use for funding future growth.

As an alternative to the traditional bank-to-bank wire transfer, you can also use Google Wallet with PayPass.

2.  Export Express Program
Considered the simplest export loan program, SBA Export Express offers financing up to $500,000, either as a term loan or a revolving line of credit. You must have operated your business for at least 12 months (there are exceptions, so be sure to ask) and must demonstrate that the loan proceeds will be used to support export activity. You can use the loan proceeds to finance export orders, expand your production facility, purchase equipment, participate in overseas trade shows or translate marketing material for foreign markets.

Contact your bank to see if it is an SBA Export Express lender.

3.  Export Working Capital Program
The Export Working Capital loan provides advances up to $5 million to fund export transactions. You can use the loan proceeds to finance suppliers, for work in process or for production of export goods and services.

Contact your bank to see if it is approved to underwrite SBA’s Export Working Capital loans.

4.  International Trade Loan Program
The International Trade Loan Program offers loan financing up to $5 million for fixed assets and working capital for small businesses in a position to either expand existing export markets or develop new markets. These loans are also available if your small business has been adversely affected by import competition and you can demonstrate that the loan proceeds will improve your global competitive position.

Contact your bank to see if it is an SBA-approved 7(a) lender.

5.  Export-Import (Ex-Im) Bank of the United States
Lastly, there’s the Export-Import Bank (referred to as Ex-Im Bank) of the United States. Ex-Im Bank supports the financing of U.S. exported goods and services without any cost to the American taxpayer. In 2010, Ex-Im Bank helped nearly 2,000 small businesses expand their export sales.

Ex-Im Bank has numerous programs for small businesses–from Working Capital to Global Credit Express to Loan Guarantees–allowing small businesses to borrow more with less. It’s Letter of Interest, a pre-export tool that helps small businesses secure financing, makes the online application process fast, simple, affordable and secure.

The top five eligibility requirements for an Ex-Im Bank loan for small business exporters are:

  • Located in the U.S.;
  • At least one year of operating history along with a positive net worth;
  • Services performed by U.S.-based employees;
  • Products shipped from the U.S. to a foreign buyer; and
  • Each product must have more than 50 percent U.S content based on all direct and indirect costs.

Knowing these solutions exist will allow you to fund, grow and succeed in the global marketplace.

In a subsequent article, I’ll examine how a letter of credit can boost profitability.

Laurel Delaney runs Chicago-based GlobeTrade.com, a leading management consulting and marketing solutions company dedicated to helping entrepreneurs and small businesses go global.  She is the creator of The Global Small Business Blog, ranked No. 1 in the world for entrepreneurs and small businesses interested in going global.  She is currently at work on a new book on exporting to be published February 2014.  Reach Laurel via email.

Ajeet Khurana
Ajeet Khurana
Ajeet Khurana wears many hats: author, angel investor, mentor, TEDx speaker, steering committee of the NASSCOM Start-Up Warehouse, Director of Founder Institute, Venture Partner with the seed initiative of a top Venture Capital firm, and former CEO of IIT Bombay’s business incubator, among others. Before all this, he was entrepreneurial twice in the field of education and web publishing. As a lecturer at the University of Texas at Austin, he taught e-commerce back in 1993, when the term "e-commerce" had not yet been coined. An undergrad in computer engineering from the University of Mumbai, and an MBA from the University of Texas, Ajeet is presently an active name in the startup ecosystem. From starting two ventures as a solopreneur, to helping a large number of startups with their go-to-market, he has never shied from getting his hands dirty. At the same time he has helped dozens of startups raise investment. He truly believes that small business owners are driving change in the world, and need to be facilitated as much as possible. Innumerable small businesses have gained from his attitude, vast professional networks, financial acumen and digital mindset.

See all posts by Ajeet Khurana
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