4 Perks of an SBA International Trade Loan

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There are several different types of SBA loans for business owners who want to expand internationally. Read on to learn more about one of them. 

If you’re a business owner who has always wanted to break into the international market, the Small Business Administration (SBA) is an excellent place to start. The SBA International Trade Loan (ITL) offers small businesses a chance to compete with the big boys by expanding into the international market. Here’s how it works.

What it’s intended to do

The ITL is intended to cover the cost of inventory, materials, and even advertising. An ITL can be used to acquire, construct, modernize, or expand a facility and equipment used in the U.S. to produce goods or services intended for international trade. It may also be used to bring back production facilities to the U.S., as working capital, and to refinance eligible business debt.

The loan has a term of up to seven years for lines of credit, 10 years for permanent working capital, 10 years for equipment and machinery, and up to 25 years for real estate. The generous term is designed to give businesses enough time to expand and realize a profit.

If you’ve applied with other lenders, but your loan application has been turned down, the SBA may step in to guarantee up to 90% of the loan. SBA-approved lenders are willing to work with you because they know that if you fail to make payments, the SBA will step in and pay back 90% of the loan.

If you decide to apply, it can pay to learn as much as you can about the process.

International Trade Loan details

Eligibility requirements

Only companies that meet these requirements are eligible for an ITL:

Must be a U.S.-based business, whether it’s located in a brick-and-mortar location or onlineMust be a for-profit businessMust have good credit and strong financialsBusiness must be small enough to conform to the SBA definition of a “small business”Must show that your business is capable of expanding into the current export market or can develop new markets

Other types of SBA loans that may work

Before heading to a local bank, it’s good to know that the ITL is not the only SBA loan that can help your business export goods to other countries. The Export Working Capital Program (ECWP) offers loan amounts up to $5 million, with the SBA guaranteeing up to 90%. However, an ECWP loan must be repaid within three years.

The Export Express Loan is designed to be approved in as little as 24 hours and has a maximum loan amount of $500,000. The SBA guarantees 75% of an Export Express Loan and offers the same repayment terms as an ITL.

Perks of an ITL

For a person whose business is ready to expand into international trade, an ITL offers a number of benefits, including:

Loan amounts up to $5 millionSBA guaranty of 90%Repayment terms up to 25 yearsA wide range of approved uses

It’s good to remember that the SBA offers more than business loans. It’s also a great place to work with a mentor, network, ask for advice, and gain knowledge. In short, it’s an often untapped resource that will partner with you to make your business all it can be.

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