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June 1, 2016

Best Practices: Navigating Through the SBA Export Express Loan Program

by Michelle Sergent Kaas

The SBA Export Express Program provides for a maximum loan or line of credit amount of $500,000.00 with a 90% guaranty for loans of $350,000 or less and 75% guaranty for loans greater than $350,000. Lenders must obtain a signed Export Express Supplemental Guaranty Agreement in order to engage in the Export Express Program.

As discussed in SOP 50 10 5(H), Subpart B, Chapter 2, Paragraph III.I. the borrower must meet the SBA’s standard eligibility requirements. The borrower must also have operated the business at least twelve full months. If less than 12 months in operation, the borrower’s key personnel must clearly demonstrate export expertise and substantial previous successful business experience plus the lender must process the Export Express Loan using conventional commercial loan underwriting procedures and cannot rely solely on credit scoring or credit matrices to approve the loan. The borrower must use Export Express loan proceeds for an export development activity such as obtaining a standby letter of credit, participation in a trade show outside the United States, translation of product brochures for use outside of the United States, obtaining a general line of credit for export purposes (as long as at least 70% of the line of credit will be used for export purposes), performing a service contract for buyers outside of the United States, completing export orders, purchasing, constructing or renovating real estate or equipment to be used in the production of goods or services for export or developing a market outside of the Unites States.

Additionally, Export Express lenders must obtain the following from the borrower and maintain this documentation in its loan file:

1. The borrower must affirmatively answer question 8 of SBA Form 1919 and provide an estimate of annual export sales on SBA Form 1919.

2. The borrower must provide the below information via an export business plan, a loan attachment or a lender-developed questionnaire:

A. A brief description of the business’ product or service which will be exported;

B. An explanation of how the loan proceeds will enable the business to enter a new export market or expand in an existing export market;

C. The countries to which the business will export; and

D. An estimate of the borrower’s export sales for the 12 month period following the date of the loan application.

3. If the borrower is an “indirect export” (where borrower’s direct customer is located in the United States but that customer will be exporting the items/services it purchased from the borrower to a foreign buyer), the borrower will need to provide certification to the lender from the borrower’s domestic customer (typically in the form of a letter, invoice, order or contract) that the goods or services are in fact being exported and to what country the goods or services are being exported.

Once the borrower provides the list of countries that it will directly or indirectly be exporting to, the lender must check Ex-Im Bank’s website or contact the SBA’s Office of International Trade to verify the borrower is authorized to conduct business with the country to which it is directly or indirectly sending the goods or services. The SBA mandates that a lender cannot make a loan to a business that exports to a foreign country which is listed as a prohibited country on Ex-Im’s Country Limitation Schedule.

For more information regarding the SBA Export Express program, contact Michelle Sergent Kaas at at 267-470-1167 or at mkaas@starfieldsmith.com.