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Forms of Short-term Financing/Small Business Administration (SBA) of the US

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Unit 7.1-Forms of Short-term Financing 

Introduction | Preparing to Borrow | Vendor Financing | Documentary Collections | Bank Check | Personal Resources | Bank Financing | Export Credit Insurance | Guarantees | Ex-Im Bank Financing | SBA | Equity Investment | Earnings Requirments | Working Capital | Collateral | Resource Management | Primary Differences | Factoring | Forfaiting | Summary | Resources | Activities | Assessment

Small Business Administration (SBA) of the US

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The SBA has some services specifically designed to help the small business get started in exporting. SBA provides financial assistance programs for US exporters. Applicants must qualify under the SBA’s size standards and meet other eligibility criteria. The SBA has two main programs to assist US exporters-- the Export Working Capital Program and the International Trade Loan (ITL) program. It is important to note that the SBA does not provide loans but rather loan guarantees.

The SBA programs provide a small business owner with financing aids that will enable the business to obtain the capital needed to get into exporting. This program is designed to help small business exporters obtain financing by reducing risks to lenders. The SBA will guarantee up to 90% of a loan from a private bank. The proceeds from the loan can be used for pre-shipment working capital, post-shipment exposure coverage, or a combination of both.

Credit managers should understand the basic credit attributes that are part of the SBA package that is funded through a bank and be able to determine if a company can qualify for SBA's financial assistance. The company must understand basic credit factors that apply to all loan requests. Every application needs positive credit merits to be approved. These are the same credit factors a lender will review and analyze before deciding whether to internally approve a loan application, seek a guaranty from SBA to support their loan, or decline the application all together.

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