How To Finance Import And Export Business

For exporters Michael Hainsworth (Michael Hains worth), extending the payment term for overseas customers has become a necessary competition strategy.

As a result, the Flare Industries Inc. of his family business has to wait for a year to get the money, which is specially designed for the oil and gas industry to produce equipment. Folel.

"Nowadays, in many large international projects, many of our clients demand extremely harsh payment terms - the long payment cycle and minimal phased payment," says Haines worth, 31.

Like many growing businesses, Austen, the capital of Texas, has begun to export its own self-funding, which will sacrifice the company's capital reserves.

"Self financing of export orders is not only very difficult, but also because of financing difficulties, we also face many difficulties in the marketing of international projects," Hainsworth said.

"Usually, we have to raise the price substantially to meet the needs of project financing, which will make our competitive advantage disappear."

In 1998, Haines worth finally found some solutions. At that time, he began to hear about the Export-ImportBank, which was set up by the federal government of the United States to provide guarantees to American exporters to help them obtain operational capital loans and provide export credit insurance for them to resist the risk of non payment from foreign customers.

With the support of the export and import bank's credit, over the past ten years, the sales volume of his company's international market has increased by more than three times.

Haines worth said, "if there is no import and export bank, we will not be able to provide the payment terms that customers want."

The report from the US Department of Commerce shows that 97% of US exporters are small businesses, which contribute about 1/3 of US exports.

However, opening up overseas markets is still facing many difficulties.

Coupled with information and rules barriers, in fact, many banks will not give priority to trade finance for small businesses.

However, the import and export bank is gradually filling this shortcoming.

The import and export bank has been accused of focusing too much on the financing of large enterprises at the expense of small export enterprises. For this reason, the US Congress passed a resolution calling for greater credit support for small businesses every year.

In order to provide more support to these exporters, the company has set up a small business department.

As a result, for the start-up companies, the current export loan procedures are much easier than before.

For those companies engaged in environment related export business, there is another reason for considering the import and export bank's services: in recent years, the export and import banks that invest in products and services related to renewable energy and water conservancy projects will give a longer repayment period.

"Unlike other companies, these companies are committed to globalisation at the very beginning of their establishment, and we hope to provide services and support for them," said Linda Conlin, vice president of the import and Export Bank of China (Linda).

If you want to get the necessary support from the export and import bank, the eyes of entrepreneurs can not be limited to the financing limit of local banks.

"Perhaps they are growing rapidly, earning 10 million dollars a year.

However, it may suddenly receive a contract of $5 million from a Saudi Arabian company, which intends to buy some oil and gas equipment.

JP Morgan (import and export bank is willing to provide loans to small businesses one of the most active borrowers) Dallas branch executive director Massa Jenty (Martha Gentry) explained, "they usually choose to go to local banks, want to borrow money as a guarantee, but most banks are often hesitant because this is because international assets are closely related to high risk, they can only be looked at as collateral guarantees."

To find a bank that focuses on the import and export financing business to ensure the smooth progress of international pactions, Haines worth emphasizes the importance of finding suitable borrowers. In his view, such banks should not only have professional experience in import and export financing, but also meet the development needs of the mid market business of the company's growing interest.

"It's very important to find a good bank and build a good relationship with it," Haines worth sighed. His company's sales in 2007 had exceeded $20 million.

"Import and export trade is often inseparable from the financing business, if there is no bank, your import and export business planning will be difficult."