For a business, selling goods beyond U.S. borders is both a daunting and exciting challenge. The excitement of seeing your business grow beyond borders is one thing, but it is fraught with questions.
How can you be sure that the foreign company that is buying your product is creditable? How can a company survive when it depends on a shipment getting to a distant land? Where can a business find the capital to start selling goods abroad? Where does a business go to even begin answering these questions?
Many businesses believe that “going international” is too complicated or too financially risky to try. Fortunately, for businesses in Washington state, there is help.
BRINGING BUSINESSES AND FINANCE TOGETHER
In 1983, the Washington state Legislature created the Export Finance Assistance Center of Washington (EFACW). The goal of this independent, non-governmental agency: provide free export finance counseling assistance to small- and medium-sized Washington state businesses that want to export abroad.
The center provides assistance in a number of areas, including seminars and training on export finance from industry experts. It also provides information on various government and private loan products. The center provides consulting services to help businesses through the complicated world of foreign banking and exchange.
“Becoming educated in common export transaction types — and the unique risk-cost balance of each — is an important first step,” said Michelle Biggs, global trade specialist with JPMorgan Chase. “The Export Finance Assistance Center of Washington is an important source of information in this regard.”
It is this specialization where the center comes into its own. The center acts as a spoke to numerous public and private financial institutions, state and federal agencies, insurance companies, brokers and credit reporting agencies. They can guide a company through the trade process — even act as a matchmaker for a business in gaining funding through financial and government sources.
“A lot of our job is to get a dialogue going between a business and a financial institution. We really strive to find the right match between a business and whoever can provide their financing,” said John Brislin, president and CEO of the Export Finance Assistance Center of Washington. “Because we are in a unique position as a neutral party, we can bring new ideas or services to the table that a business may never have considered. EFACW matches small businesses with banks, non-bank lenders, and credit insurers to support their export activities.”
Funding from the state Department of Commerce underwrites the cost of services, so businesses aren’t laying out more funds to take this next step.
A BRIGHT SPOT IN THE ECONOMY
Recently, the Export-Import Bank of the United States, known as the Ex-Im Bank, announced that more than 1,700 small business transactions totaling more than $2.4 billion were completed in the United States in the first half of fiscal year 2011.
“Our economic recovery is dependent in large part on the success of our small businesses,” said Ex-Im Bank Chairman and President Fred Hochberg in a May 20, 2011 news release. “Our efforts to encourage more companies to export are paying off.”
And this may be only the beginning.
In January 2010, the Obama administration pledged to double U.S. exports by 2014. To help make this a reality, the Ex-Im Bank set a target of adding 5,000 new small businesses by 2014 to their portfolio and reaching $9 billion in annual small-business exports. In the first year of this effort, more than 900 small-businesses have worked with the Ex-Im Bank for the first time in 2010.
Taking a cue from the efforts of the administration, the Ex-Im Bank, private banks and companies have tailored products for smaller exporters. One such bank is JPMorgan Chase.
“JPMorgan Chase has teams throughout the world that are dedicated to helping U.S. small- and medium-sized companies conduct business in foreign markets,” said Curt Fraser, president of middle market banking for JPMorgan Chase. “Often we have companies meet with our bankers on the ground in foreign markets and we help them navigate the local business environment and walk them through the nuances of that country’s banking system and requirements.”
It’s not only banks that are helping small- and medium-sized businesses with financing their exports. UPS Inc. is expanding its international shipping business to include financial services via their business unit, UPS Capital.
“What separates [UPS Capital] from others is that we are a one-stop-shop for businesses,” said Gina Kaveny, senior business development officer for UPS Capital North America. “We can ship, insure and allow small to mid-size companies to borrow operating capital against goods warehoused abroad or moving through the UPS network.”
So far, everyone’s efforts to increase exports — both private and public — have been successful.
Exports from Washington state have been one of the bright spots during the Great Recession. Washington state’s exports recovered strongly in 2010, with more than $1.4 billion in value of exports over 2009. Even though these statistics are still dominated by aerospace, agriculture and forestry, sectors such as medical equipment are rising — sectors that are dominated by small and mid-sized businesses.
What’s perhaps even more encouraging is that businesses are becoming more aggressive about exporting their goods.
“We’ve seen a definite increase in interest,” said Brislin. “A lot more companies are attending our seminars or calling us up asking for assistance. It is really encouraging to see. Especially when a business discovers that there is more help for them then they could ever imagine. ”
