Export financing for small businesses: programs, payment terms and risks

On this page

• Choose the payment term first
• SBA export programs, by size and use
• A worked example: borrowing against one export order
• What EXIM and state export programs add
• When export financing is a bad idea

Choose the payment term first

How you get paid sets how much risk you carry, and lenders price that risk. The Commerce Department's Trade Finance Guide describes the main options.

• Cash in advance. The exporter carries virtually no risk.
• Letter of credit. Risk is spread between exporter and importer, provided the terms and conditions are met.
• Documentary collection. Riskier for the exporter than a letter of credit.
• Open account. Substantial risk, because the buyer could take the goods and default on payment.
• Consignment. Significant risk, because payment is due only after the goods are sold.

On open account, the guide says you can reduce the risk of non-payment with export credit insurance, factoring or a standby letter of credit. EXIM says its export credit insurance protects foreign receivables from commercial and political losses. It covers up to 95 percent of sales invoices. EXIM also says lenders are more likely to include insured foreign receivables and inventory in your borrowing base.

SBA export programs, by size and use

SBA says its export finance programs give lenders up to a 90 percent guaranty. That percentage is the lender's protection, not a cap on what you owe. SBA backs three export loans.

• Export Express loans reach $500,000. The guaranty is 90% on loans of $350,000 or less and 75% above that. Export Express lines of credit run up to 7 years. Eligibility needs at least 12 full months in operation, unless the key personnel have demonstrated export expertise and the lender underwrites conventionally.
• Export Working Capital Program (EWCP) loans reach $5,000,000. The guaranty is 90%, capped at $4,500,000, and maturity is up to 36 months. They finance export orders and receivables.
• International Trade loans reach $5,000,000. The guaranty is 90%, also capped at $4,500,000. They can include up to $2,000,000 of working capital. They also suit fixed assets, such as a production facility for export.

An Export Express line may serve domestic needs only in part. At least 70 percent of the line must go to export purposes (SOP 50 10 8.1, Sec. B, Ch. 5, Para. A.1).

A worked example: borrowing against one export order

Suppose you hold a $200,000 purchase order from a foreign buyer. Your costs to fill it, including overhead, are $150,000. On a transaction-specific EWCP loan, SBA's maximum advance is 90 percent of the order or your costs, whichever is less. Ninety percent of $200,000 is $180,000. That is more than your costs, so the most you can draw is $150,000. Source: SOP 50 10 8.1, Sec. B, Ch. 5, Para. B, Advances and Receivables (about pp. 184 to 186).

Now suppose the goods ship and you invoice the buyer $200,000 on open account. You also hold $100,000 of export inventory in the United States. On an asset-based line, SBA's maximum advances are 90 percent of eligible foreign receivables and 75 percent of eligible export inventory. On open account with no credit insurance or letter of credit, the receivable advance may not exceed 80 percent.

• Insured or letter-of-credit receivable: 90% of $200,000 is $180,000. Add inventory: 75% of $100,000 is $75,000. Borrowing base: $255,000.
• Uninsured open-account receivable: 80% of $200,000 is $160,000. Add the same $75,000. Borrowing base: $235,000.

Insurance or a letter of credit lifts the borrowing base by $20,000 here. Those are SBA's maximums, and your lender may advance less. Some delegated lenders may go higher on strong buyers, with documentation. Credit insurance has its own premium, which EXIM's page does not state. Get a quote before you count the gain.

On an EWCP loan, the upfront fee depends on maturity. For FY2027 it is 0.25% to 0.80% of the guaranteed portion, by maturity. Export Express and International Trade loans use the regular 7(a) fee schedule. On a $1,000,000 EWCP loan with a 90 percent guaranty, the guaranteed portion is $900,000. A 0.25 percent fee for a maturity of 12 months or less is $2,250. A 0.80 percent fee for 25 to 36 months is $7,200 (SBA Information Notice 5000-881797, p. 3).

What EXIM and state export programs add

EXIM's Working CapitalWorking CapitalMoney for day-to-day costs such as payroll, rent and inventory. Full definition Guarantee gives the lender a 90 percent loan-backing guarantee. The loan can pay for materials, equipment, supplies and labor to fill export orders. It can also post standby letters of credit as bid or performance bonds, or buy finished products for export. EXIM's page says there is no minimum or maximum transaction amount. It also says working capital support needs a minimum of 10 percent U.S. content. Other EXIM rules may apply, so ask before you quote a buyer.

SBA's State Trade Expansion Program, or STEP, is different. STEP awards go to state and territory governments, not directly to businesses, and most states receive support. Ask your state's export office what it funds.

SBA advises applying for lines of creditlines of creditA credit limit you can draw on, repay and draw on again. before you finalize an export sale or contract.

When export financing is a bad idea

Export programs are built for specific risks. They fit poorly in four cases.

1. Unverified buyers on open account. Commerce calls open account a substantial risk. SBA caps advances on uninsured open-account receivables at 80 percent, and a lender may require credit insurance. One nonpaying buyer becomes your debt.
2. A small export share. About one in five firms had international customers in 2024. For most of them, those customers were under 10 percent of sales (Federal Reserve, 2026 Report on Employer Firms, p. i). If exports are a small slice of your revenue, a standard line of credit may do the job with less paperwork.
3. Thinking the guaranty protects you. Commerce is plain that a government guarantee protects the lender and not the business. You still owe the full loan.
4. Costs that move after you quote. More than four in ten firms in the Fed's survey named tariff-related costs as a financial challenge. A signed export price does not adjust when your input costs rise, so build a margin cushion into the quote.

Commerce also notes that a lender may require an exporter to obtain export credit insurance on its foreign receivables. Price that into the deal.