Why now might be the time to see if exporting could help your bottom line
The growth of U.S. exports is a trend that should continue along with a strengthening global economy, says a report from the Department of Commerce.
Plenty of programs are in place to help companies do even more exporting, says Ralph Barnett, executive vice president and manager of the Real Estate Lending Division at Bridge Bank.
“There is a lot being done at the local level to encourage activity,” Barnett says. “Is there still a level of bureaucracy that has to be learned? Absolutely. But I think there is an ongoing effort to make it easier.”
Following a decline during the 2009 recession, U.S. goods exports grew 21.1 percent in 2010 and 15.8 percent in 2011, according to the Department of Commerce report. The rebound has slowed a bit since, but the trend still indicates growth.
“Most people involved in these programs at the government level truly believe in them and they are bending over backwards to help businesses expand,” Barnett says.
Smart Business spoke with Barnett about how exporting can help your business.
What programs are available to help companies do more exporting?
The U.S. Small Business Administration is encouraging export activities to help companies increase sales and profit, reduce dependence on the domestic market and stabilize seasonal fluctuations.
And while the agency’s focus is on small businesses, many of these small businesses are larger than you might think. We are working with an exporter that has over $40 million in annual sales who qualifies for the SBA loan program.
The agency is increasing the guarantees that are available to banks to encourage those banks to make loans to small businesses that export.
Why don’t more companies participate?
It does require a level of expertise and experience to lend to companies that want to export. There is a degree of risk, therefore many banks don’t emphasize this type of lending activity.
Many companies that export are more familiar with the program through the Export-Import Bank. The SBA program is considerably different in that it allows indirect exporters.
For example, an indirect exporter manufactures a product for another U.S. company and that other company then exports that product overseas. As an indirect exporter, you would be eligible for these enhanced export loan programs that the SBA offers.
If your company is adversely affected by import activity, you would also be eligible for these loan programs. So it also helps companies that don’t necessarily export, but are negatively impacted by importers.
Where can you learn more about the benefits of exporting?
The U.S. Export Assistance Center provides marketing and technical assistance and training on how to become an exporter or expand your exporting activity. They can also direct you to lenders who participate in the various export loan programs, as well as provide information on export insurance.
How much advance planning is required?
The SBA requires a brief business plan that outlines how the loan is going to assist your company in starting or expanding your export activity. It doesn’t need to be a lengthy, detailed business plan. A one- to two-page discussion should suffice, along with some financial projections.
How steep is the learning curve when it comes to exporting?
There is a learning curve and there will be some upfront costs.
It’s often a fear of the unknown that stops many smaller businesses from even considering exporting.
Obtaining assistance in navigating through red tape and understanding the risks, either through their bank or the SBA center, will shorten that learning curve.
Once business owners start exporting, they realize the associated benefits and those fears fade away. Even interacting with two of our closest neighbors, Canada and Mexico, can really open up a much larger market opportunity.
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