By Dennis Quick
Senior Staff Writer

Entrepreneurs and small business owners interested in selling their wares overseas have a number of financial factors to consider.

For openers, if a foreign buyer wants your product, do you have enough financial resources to supply production and fill the order?

Is your potential foreign buyer able to pay? And just how will you be paid?

What loans are available if you need them?

These are some of the questions aspiring exporters must get answered before embarking on international trade, said Phil Minard, a U.S. Commercial Service international trade specialist at the Charleston Export Assistance Center in North Charleston.

Also, those wanting to export need to learn how to negotiate with buyers and familiarize themselves with the export language: “cost and freight” (commonly known as C&F, in which the exporter pays the costs and freight necessary to get the goods to the named destination); “cost insurance and freight” (or “CIF,” where the exporter pays the cost of goods, cargo and insurance plus all transportation charges to the named port of destination); and the 11 other international commerce (or INCO) terms, said Dan Holt, regional manager for international trade programs for the U.S. Small Business Administration’s Carolinas Export Assistance Center in Charlotte, N.C., whose territory includes South Carolina.

All of this requires proper financing. For aspiring exporters seeking loans and other financial services, Minard and Holt recommend the Export-Import Bank of the United States, online at www.exim.gov, which is designed to help small businesses.

Below is a list of some of the Export-Import Bank’s key services:

Working capital loans

These loans help small businesses fund their export activities. Issued by commercial lenders to eligible exporters, the loans are backed by the Export-Import Bank, which guarantees 90% of the loan, including principal and interest. The loans may be used to purchase finished products for export or to pay for raw materials, supplies, equipment, labor and overhead to produce goods or provide services for exporting.

Eligible exporters must be located in the United States, must have been in business for at least a year and must have a positive net worth.

Eligible exports must be shipped from the United States, products must have at least a 50% U.S. content and services must be performed by U.S.-based personnel.

Export credit insurance

Exporters may reduce foreign risk by purchasing export credit insurance through an insurance broker or directly from the Export-Import Bank.

Export credit insurance protects the exporter against the failure of foreign buyers to pay their credit obligations for commercial or political reasons; encourages foreign buyers to offer competitive terms of payment; supports an exporter’s penetration of higher-risk foreign markets; and, because the proceeds of the policies are assignable from the insured exporter to a financial institution, gives exporters and their banks greater financial flexibility in handling overseas accounts receivable.

Small business insurance policy

The Export-Import Bank offers a 180-day insurance policy geared to meet the insurance needs of smaller, less-experienced exporters. Spare parts, raw materials and consumer goods are the products usually supported under this policy. The Export-Import Bank assumes 90% of the commercial and 100% of the political risk involved in extending credit to the exporter’s overseas customers.

Dennis Quick is senior staff writer at the Business Journal. E-mail him at dquick@charlestonbusiness.com.

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