International Trade Loans
The SBA International Trade Loan program is a term loan designed for businesses that plan to start/continue exporting or those that that have been adversely affected by competition from imports. The proceeds of the loan must enable the borrower to be in a better position to compete.
The International Trade Loan Program offers borrowers an increased maximum outstanding SBA guaranteed portion of $1.75 Million instead of the $1.5 Million for regular SBA borrowers.
How to Apply
Interested businesses should apply through a participating SBA lender.
Small businesses that are in a position to expand existing export markets/develop new export markets or small businesses that have been adversely affected by international trade and can demonstrate that the Loan proceeds will improve their competitive position are eligible for International Trade Loans.
The maximum gross amount ($2 million) and SBA-guaranteed amount ($1.5 million) for an International Trade loan is the same as a regular 7(a) loan. However, there is an exception to the maximum SBA 7(a) guaranty amount to one borrower. When there is an International Trade loan and a separate working capital loan, the maximum SBA guaranty on the combined loans can be up to $1.75 Million as long as the SBA guaranty on the working capital loan does not exceed $1,250,000.
The SBA does not establish or subsidize interest rates on loans. Interest rates are negotiated between the borrower and the lender, subject to SBA caps. Rates can either be fixed or variable, and are tied to the prime rate as published in The Wall Street Journal. For loans greater than $50,000 and maturity in excess of 7 years, lenders may charge up to 2.75 percent over prime rate.
International Trade Loans are required to be secured by a first lien position or first mortgage on the property or equipment financed by the loan. Additional collateral (to the extent it is available) may be accepted to ensure that the loan is fully collateralized. The requirement for a first security interest on the property or equipment financed is a mandatory condition of the International Trade loan.
Use of Proceeds
International Trade loand funds may be used for the acquisition, construction, renovation, modernization, improvement or expansion of long-term fixed assets or the refinancing of an existing loan used for these same purposes. There can be no working capital as part of an IT loan or as part of any refinancing.
Loan Maturity and SBA Fee
The maturity of an International Trade Loan is usually 10 to 15 years for machinery and equipment (not to exceed the useful life of the equipment), and up to 25 years for real estate. The SBA guaranty fee is between 2% and 3.75%, depending on the size of the loan.