What Is SBA International Trade Loan?
Among the various SBA export financing loans available for small business, SBA international Loan is available for companies that produce goods in the USA and export them to international markets. It also supports local businesses that have been negatively affected by international trade.
The maximum loan that can be given under the SBA International Trade program is $5 million, and the lender is also given a 90 percent loan guaranty.
How does SBA International Trade Loan Work?
Here are the main terms of the SBA international Trade loan:
- The applied interest rate varies from 6.35 to 9.25 percent.
- The loan terms depend on the option and the needs. Terms can include:
- Lines of credit of up to seven years
- Equipment and working capital of up to ten years
- Commercial real estate for up to twenty-five years
- US-based machinery, business assets, and property must be shown as collateral
Advantages and Disadvantages of SBA International Trade Loan
The benefits of the loan include:
- Increased chance of being approved by lenders owing to low risk involved
- Lower interest rates than the market
- Highly specific to the needs of the business
Cons of the loan include:
- The strict eligibility requirements mean many businesses can’t avail the loan
- The application process is quite hectic
- You need to show collateral
Who Qualifies for SBA International Trade Loan?
To qualify for SBA International Trade Loan, one must be eligible for a conventional SBA 7(a) loan. Qualifications for such a loan include having good credit and robust financial standing, conforming to size standards as per SBA, and being a US-based, for-profit business.
There are certain qualifications restriction solely on International Trade loans as well. For starters, borrowers must use the fund to exclusively acquire, renovate, construct, modernize, expand, or improve their facility or use it to produce goods for international trade.
One must also show their capability of conducting expanding into export markets as well as creating new markets.
How to obtain SBA International Trade Loans for my business?
To apply for an SBA international Loan, you must find a lender who is an SBA-participating entity. Apply for the loan through the individual. The lender will then submit your application to the SBA. Also, if you wish to qualify for the loan because of the adverse impact of imports, you must submit documents that prove the impact.
What are the costs associated with SBA International Trade Loans?
The costs associated are the same as other SBA loans. This includes:
- A guarantee fee of 0.25 percent on the guaranteed part of the loan
- A fee of 2-3 percent on long term loans
- A 1 percent assumption fee
- 1-5 percent early repayment fee