The Export Working Capital Program (EWCP) is a type of SBA loan that’s designed specifically for businesses that generate sales through exports and require upfront assistance to support these sales.
Exporters can apply for EWCP loans in advance of finalizing an export sale or contract. With an approved EWCP loan in place, exporters have greater flexibility in negotiating export payment terms – secure in the assurance that adequate financing will be in place when the export order is won.
How It Works
Working capital advances on export orders, export receivables, or letters of credit are not often provided by most banks in the United States. As a result, some smaller businesses may lack the export working capital required to support their export sales. That is when SBA programs can come in handy.
As a credit enhancement, the SBA offers lenders up to a 90% guarantee on export loans, ensuring that lenders supply the necessary export working capital.
The SBA's export loan program is administered by a network of SBA Senior International Credit Officers stationed in the U.S. Export Assistance Centers across the country. These trade finance experts are available to explain the SBA's export loan programs, the application process and forms, and to assist exporters in selecting proper payment methods.
They can also connect businesses with specialists to help them increase export sales and manage international payment risk.
Exporters can apply for EWCP financing before completing an export sale or contract. With an approved EWCP loan in place, exporters have more negotiating power when it comes to export payment terms, knowing that appropriate finance will be available when the export order is won.
What are the benefits of the EWPC?
They Support Client Growth
- Clients who export realize that exporting is essential to market expansion and continued viability.
- Clients who export are usually more profitable than their non-exporting counterparts.
They Minimize Risk & Accommodate Customer Needs
- The EWCP provides you with a 90% guarantee on the performance of your exporting client, thus bridging the financing gap between order receipt and final payment.
Increased Fee Income
- Fees from wire transfers, letters of credit, and bank servicing add directly to your bottom line.
- Finance single, large, transaction-backed lines or multiple transactions with an asset-based line.
- Take advantage of local SBA Trade Credit Officers for guidance and client-focused, custom-tailored deal structuring.
- Adding a trade finance capability to your tool chest provides you with market differentiation in the small business banking environment.
- Decisions are usually made in 5-10 working days.
- Or, apply for Preferred Lender status which provides a 1-2 day turnaround.
Who Is Eligible For The EWCP?
The EWCP is widely available across the US for manufacturers, wholesalers, export trading companies as well as service exporters. It’s important to note that those lending through the EWCP must meet SBA criteria and size standards; this currently stands at under 500 employees for manufacturers and less than 100 employees for wholesalers.
Also, eligible applicants must have been in business for at least one year before receiving funding from the EWCP. However, this requirement can be waived in some scenarios, but only if the applicant in question can prove that their business is performing exceptionally well and that they have the relevant expertise required to continue doing so.
In terms of export eligibility, the exports being financed must be shipped and titled from the United States; there is no U.S. content requirement for the product being exported.
The exports must comply with all U.S. Export Administration Regulations and cannot be shipped to a country where the United States has imposed trade embargoes or sanctions. “Indirect” exports to domestic buyers who subsequently export, also qualify for EWCP financing.
How Much Can I Borrow?
The maximum amount of an EWCP line of credit/loan is currently at $2 million. Participating banks receive a 90% SBA guarantee as long as the total amount guaranteed by the SBA to the borrower does not exceed $1.5 million.
If the SBA guaranteed share exceeds the $1.5 million limit, banks can still receive a 90 percent guarantee through a co-guaranty scheme between the SBA and the Export-Import Bank of the United States (EXIM).
Under this arrangement, the bank continues to submit only one loan application to the SBA and receives a 90 percent U.S. government guarantee backed by both agencies. A higher fee may apply for the EXIM Bank guaranteed part.
Key Features of the ECWP
- The SBA does not set or subsidize loan interest rates. Instead, the interest rate is negotiated between the borrower and the participant lender and can be fixed or variable.
- Export-related inventories and debts generated by EWCP-financed export sales will be considered appropriate collateral. The SBA also asks owners to provide a personal guarantee of at least 20% of ownership.
- EWCP loans are typically issued for one year. The SBA fee for an EWCP loan with a 12-month maturity or less is ¼% (0.25%) assessed on the guaranteed portion of the loan.
- The SBA can reissue EWCP loans on an annual basis and the guarantee fee remains ¼%.
How Can I Apply?
You can apply for the EWCP by making a request directly to a specific lender. If you have a small business and you’re interested in applying for the program, we urge you to contact the U.S. Export Assistance Center (USEAC) to discuss if you are eligible for the EWCP program and whether it is the best way to meet your export financing needs.
Participating lenders assess and approve applications before submitting them to SBA officials at the USEAC office serving the exporter's geographical jurisdiction.