Preshipment Financing for Small Business Exports

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Pre-shipment Financing for Small Business
Exports
Pre-Shipment Working Capital

• ....Working capital prior to shipment.

Global California Conference 2009
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Pre-Shipment Working Capital
Premise . . . If Small Business Exporters
could get working capital financing against
Documentary Letters of Credit, they could
increase their sales and create more jobs.

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Pre-Shipment Working Capital

• The United States Trade Enviornment
• US banks 9800
• US exporters 236,000 97 are small business
  (228,000)
• Value of their exports 200 Billion
• 12 million US jobs are directly supported.
• 96 of the worlds customers are outside of the
  US.
• 22 of trade transactions use Documentary
  Letters of Credit.

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Pre-Shipment Working Capital

The Finance Problem US commercial banks
do not provide working capital loans to small
business exporters with (only) Documentary
Letters of Credit. The Documentary Letter
of Credit is considered a method of
reimbursement, but not as collateral by itself.
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Pre-Shipment Working Capital
Documentary Letter of Credit Basic Terms Terms
and conditions are based on the UCP for 196
countries.

Standard Letter of Credit Information 40A
Documentary Credit Irrevocable. 50 Buyer /
Applicant Name 59 Seller / Beneficiary
Name 39B Amount 42C Drafts, Sight or 0 180
Days. 45A Description of Goods. 46A Documents
Required. Issued under UCP
600.
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Pre-Shipment Working Capital

• Small Business Administration
• SBA Export Working Capital Program (EWCP). . . .
• Loan guaranty's for export sales transactions.
• Up to 2 million loan amount.
• No US content requirement.
• Can be transaction vs asset based.

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Pre-Shipment Working Capital
However . . . . . The SBA's EWCP program
requires banks to use their standard practices
which in turn requires them to demand collateral
for the loan.

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Pre-Shipment Working Capital
Opportunity Allow the SBA to guarantee Export
Working Capital Loans to Small Business Exporters
with a good Documentary Letter of Credit.

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Pre-Shipment Working Capital
Contact Information John W. Dunlop InternetLC.co
m, LLC Tel [phone] Email
JWDinternetlc_at_gmail.com