BANKABLE DEALS:
A Question & Answer Guide to Trade Finance for U.S. Small Business

Cosponsored by the
U.S. Small Business Administration
and AT&T

This publication is the product of a public/private sector initiative be-
tween the U.S. Small Business Administration and AT&T. In events of this
nature, views and opinions that are not necessarily those of the cosponsors
may be expressed. SBA's cooperation does not constitute or imply endorse-
ment of any opinions, products and/or services. All SBA programs are
extended to the public on a nondiscriminatory basis.

ACKNOWLEDGMENTS

Our sincere appreciation to John A. Adams, Jr., Union National Bank of
Texas -- Laredo; Timothy Baker, Bank One, Columbus, Ohio; and Charles
Boyanton, International Trade Center, Small Business Development Center,
Athens, Georgia, who provided expertise and guidance during the
development of this guide.

INTRODUCTION

Exporting can mean big profits to a small business. For all the
opportunities exporting provides, however, it can present as many chal-
lenges. Financing exports and fear of not being paid are two of the most
often cited barriers to trade. This booklet is designed to take the mys-
tery out of export finance and to answer the questions small businesses ask
most. You'll learn about the various types of financing available, how to
approach your banker for a loan, where to go if your banker can't or won't
provide the credit, how to negotiate low-risk, yet competitive payment
terms with your buyers and much more.

As you plan for your trade financing needs, remember to allow enough time
for the credit process. To secure the necessary financing, you should
prepare thoroughly, following the guidelines suggested in this guide. Your
preparedness, along with persistence and commitment, should pay huge
dividends.

Q. What's the first step? Where should I go to obtain export financing?

A. Your first resource for export financing is your local bank. If you
cannot receive the necessary credit for your export activities from your
own bank, you should shop around for another bank willing to consider your
loan proposal. Generally, a bank that has an international department or
one that is active in small business lending will be more receptive than
others to your proposal. Ask your bank for the name of a correspondent
bank that provides international financing assistance. In shopping for a
bank, however, keep in mind the distinction between international trade
services and international trade lending. Some banks have international
divisions that offer international trade services, such as advising and
negotiating letters of credit, but these divisions do not lend money.
International lenders, on the other hand, have the authority to make loans,
as well as provide related services. Be sure to verify that the bank
officer with whom you are dealing has the authority to lend for an export
transaction or is willing to work with another division that has lending
authority.

Before approaching a bank for financial assistance, you should understand
the distinction between venture capital and lending. Venture capitalists
invest in a business by providing capital in exchange for equity. Venture
capitalists expect that, as the business grows, their equity in the
business will grow proportionally. Unlike the venture capitalist, the
lender does not obtain equity in the enterprise. Lenders simply provide
funds to a small business in the form of loans. Lenders make their money
on the difference between the rate at which they borrow money and the rate
at which they lend to their customers. Lenders, then, are more sensitive
to risk; a proposal that looks good to the venture capitalist may not
appeal to a lender.

Generally, you should make your financial arrangements well in advance of
expected sales. If you wait until you need credit to begin talking to your
banker, you'll probably lose the sales. If you are unable to secure a
conventional loan from a private lender, your next step should be to
contact a government agency that provides export financing. See the
resource directory below for information on available assistance programs.

Cardwell Manufacturing Co. of El Dorado, Kansas, won a bid from the Polish
Oil & Gas Company, an agency of the Polish government, to furnish workover
oil rigs valued in excess of $3,000,000. The company needed short-term
financing to fill the order. SBA provided an 85 percent guarantee under
its export working capital program on a loan of $850,000 to cover a portion
of the manufacturing costs. The following year Cardwell received a
contract from the General Petroleum Company of Cairo, Egypt, and requested
another advance on its revolving loan guarantee to complete the job.
Cardwell used a letter of credit to guarantee payment on this order.
Cardwell, also selling to Russia and Syria, has achieved such great success
in exporting that its local bank, through correspondent bank relationships,
is now providing short-term working capital without SBA's guarantee.

Q. What criteria will bankers use to evaluate my loan proposal? What
documents should I take to the bank when I apply for a loan?

A. Some internationally oriented banks are willing to finance export sales
for small businesses that otherwise might not qualify for general working
capital financing. In all cases, finding a lender willing to consider your
proposal requires that

- the lender know you and feel confident in your ability to
perform,
- the purpose of the loan makes sense for your business and
- the request is for a reasonable amount.

Deals that are the most bankable are ones in which you can show a secondary
source of repayment, should your primary source fail. The banker needs to
be reasonably assured of receiving payment if your promised source of
repayment dries up.

Have these documents ready when you approach your lender:

- History of the business
- Domestic and export business plans
- Purpose of loan
- Export transaction-related documentation, e.g., letters of credit,
import licenses, etc.
- Financial statements for past three years (balance sheet and income
statements) for existing businesses
- Past three years' tax returns
- Projections of income, expenses and cash flow
- Signed personal financial statements

Your banker will probably also ask to see the following:

- Personal resum‚
- Aging of accounts receivable and payable (for existing
businesses)
- Schedule of term debts (for existing businesses)
- Lease details, if any

Q. What types of financing are available? Can I secure financing for each

stage of the export process?

A. How you plan to use the proceeds determines the type of financing
needed. It is important to keep in mind the difference between general
working capital and transaction financing. General working capital financ-
ing can be used to acquire materials for work in process or to acquire
inventory to satisfy an order. Your ability to qualify for general working
capital financing depends on, among other things, the strength of your
balance sheet and your prospects for generating sufficient earnings over
the life of a loan to repay it.

BGW Systems, Inc. produces professional audio amplifiers for concert halls,
auditoriums and other facilities. Just two years after opening its doors,
the company, based in Hawthorne, California, began working with Universal
Studios to develop the audio system for the movie Earthquake. This
contract provided BGW Systems with its first look at the world marketplace.
The sound system was used at showings of the movie around the world. In
the early 1990s, BGW Systems needed working capital to finance its
aggressive expansion into international markets. The company received a
$200,000 loan, guaranteed under SBA's regular 7(a) business loan program,
to purchase the necessary raw materials, labor and inventory. Today BGW
Systems exports to several countries throughout Europe and Asia. Exports
account for 60 percent of its sales.

Transaction financing, on the other hand, means financing to support spe-
cific transactions that, in most cases, are self-liquidating. With
transaction financing, a bank can structure the loan so that a foreign
buyer's payment is received by the bank first. The bank then applies the
sales proceeds to pay off the exporter's loan before crediting the
remainder to the exporter's account. Structuring the loan this way, a bank
can virtually eliminate any risk that a borrower will divert the export
sales proceeds to a use other than repayment of the loan that helped
generate the sale. By eliminating this risk, banks can become more
aggressive about the kinds of businesses they finance and the size of loans
they support.

Transaction financing is critical to many small, undercapitalized firms.
Lenders who may otherwise have reached their lending limits for these
businesses may nevertheless finance individual export sales if the lenders
are assured that the loan proceeds will be used solely for pre-export
production; and any export sale proceeds will first be collected by them
before the balance is credited to the exporter. Given the extent of
control lenders can exercise over such transactions and the existence of
payment mechanisms unique to -- or established for --international trade,
transaction finance can be less risky for lenders than conventional working
capital loans. The weaker the financial position of a company, the
stronger the transactional base must be. When making transaction loans to
less stable companies, bankers monitor the transactions more closely and
must be able to control the outflow of documents and goods and the inflow
of monies.

The term trade finance is commonly used to describe three distinct
activities: pre-export, accounts receivable and market development
financing. Small businesses often need pre-export financing to gear up
for specific export sales. Loan proceeds are used to pay for labor and
materials or to acquire export inventory. Others may need accounts
receivable financing, where a bank lends a variable amount based on the
volume and quality of the borrower's foreign accounts receivable. Keep in
mind that most U.S. banks will not finance any of a small business's
foreign accounts receivable unless the accounts are fully backed by export
credit insurance. If so insured, some banks will lend from 50 to 80
percent of the value of the receivable.

Financing for foreign market development activities, such as participation
in overseas trade missions or trade shows, is often difficult for small
businesses to arrange. Most banks are reluctant to finance these
activities because, for many small firms, their ability to repay the loans
depends on their success in consummating sales while on a mission --
prospects that in many cases are speculative. Although difficult for many
small firms to do, the recommended source for financing these activities is
through the working capital of the firm. If your working capital is
insufficient, then you should apply for a separate bank loan specifically
for foreign market development activities. Negotiate with your banker a
set repayment schedule that you can service realistically from your
company's cash flow.

Q. What payment mechanisms are used in international trade, and how do I
select the best method for my export sale?

A. The primary methods of payment for international transactions, ranked
in order from most secure to least secure for the exporter, include --

- Payment in Advance
- Letter of Credit
- Documentary Collection (Draft)
- Open Account

In negotiating payment terms, you will need to balance lowering your risks
with offering competitive terms to your buyer.

PAYMENT IN ADVANCE

Many small businesses will export only when the buyer is willing to make
payment in advance. While cash in advance may seem most advantageous to
you, insisting on these terms ultimately could cost you sales. Foreign
buyers prefer greater security and better cash utilization, just like
domestic buyers. Some buyers may even find the requirement insulting,
particularly if the buyer is credit-worthy in the eyes of the rest of the
world. Advance payments and progress payments may be more acceptable to a
buyer, but in highly competitive markets even these terms can result in
lost sales.

LETTER OF CREDIT

A letter of credit (LC) is a payment method that, in essence, substitutes
the credit-worthiness of a bank for that of a buyer. The importer, or
buyer, applies to a bank for the LC. An irrevocable LC, once opened,
cannot be changed without the express permission of the exporter. If an
irrevocable letter of credit is confirmed by a U.S. bank, it virtually
eliminates the commercial credit risk of an export sale. To some extent,
a letter of credit also protects the buyer, because a bank cannot pay the
exporter until the exporter presents documents that comply fully with the
terms and conditions of the letter of credit.

Payment under an LC can be at sight, a certain number of days after sight,
or by a date certain. At sight means payment must be made, generally
within 72 hours, upon presentation of the required documents to obtain
title to the goods. Payment a certain number of days after sight means the
exporter will be paid sometime after negotiation or acceptance of the
documents. Payment at a date certain is sometime after documents are
negotiated or accepted, but at a date fixed by the terms of the LC. At
sight or date certain means the least risk for the exporter.

When deciding whether to require payment by LC, you should consider the
additional cost of bank confirmation and related fees. A typical LC can
cost $200-$300, including your bank's examination fee, which can range from
1/10 to 1/4 percent. The greater the value of the shipment, the greater
the fee.

Another factor to consider is the possibility that your competitors may be
willing to offer payment terms more favorable to the buyer. The cost of an
LC to an importer can be significantly greater than the cost to an
exporter. Some importers may not accept your payment terms because of
these higher costs. Check with an experienced international banker to
determine which payment method is right for you.

DOCUMENTARY COLLECTION (DRAFT)

Payment on collection terms is equivalent to COD (cash on delivery) or
payment by check. The term documents against payment means that a buyer
cannot obtain title to a shipment until it reaches its final destination
and is paid for. The term documents against acceptance means a buyer can
take title to a shipment after the shipment arrives and the buyer signs a
time draft promising to pay in a certain period of time after receiving the
documents.

Sales under documentary collections terms are less risky to a seller than
open account because this method creates a written obligation to pay. On
the other hand, an exporter faces the risk that a buyer may not acknowledge
presentation or accept the documents. If this occurs, the exporter must
absorb the costs of finding another buyer for the goods or have the goods
returned for sale in the domestic market.

OPEN ACCOUNT

Selling on open account carries the greatest risk for the exporter. The
open account method should be offered only when you have an established
relationship with the buyer. It's also appropriate for transactions
between U.S. companies and their foreign subsidiaries. If you must sell on
open account, stipulate the number of days from a specific date on which
payment is due.

See page to learn more about protecting yourself against the commercial
risk of nonpayment by insuring foreign accounts receivable. Also see page
for information on Eximbank's export credit insurance programs.

Q. What is a pro forma invoice? Does it play a role in export financing?

A. The ability to successfully finance an export sale can depend on
whether the sale is arranged properly. A detailed, thorough pro forma
invoice -- or export quotation letter -- is one tool that can help to
reduce the risks associated with international transactions.

A pro forma invoice essentially is a quotation in an invoice format, but it
is not used for payment purposes. A pro forma invoice can facilitate
financing because, in addition to describing the product and setting the
price and time of shipment, it can be used to establish the terms of sale
and payment. The invoice is often used in tandem with a letter of credit.
Your pro forma invoice should state that the transaction will be handled by
LC and state all the conditions that the importer's bank should include on
the LC. The conditions that should be specified include exact cost,
shipping costs, payment terms, insurance, banking charges and so forth.
See page for a sample pro forma invoice. Providing a detailed pro forma
invoice will enable the buyer to open a letter of credit that meets many of
the common requirements needed to obtain pre-export financing from a U.S.
bank. By establishing in advance how the buyer and seller will divide the
risks and obligations of specific transactions and how payment will be
remitted, lenders can make an accurate assessment of the risk inherent to
a specific sale. Preparing a pro forma invoice also can help you
anticipate financing costs, which, in some cases, can be built into the
selling price of the export. For example, if you request a "letter of
credit confirmed by a major U.S. bank," the bank fee for confirming the
letter of credit, which ordinarily is for the account of the seller, can be
added to the price of the export. Even if the buyer is unwilling to pay
the added cost, you know up front what fees must be absorbed and what the
final profit margin will be.

Q. Specifically, how does a letter of credit work? What steps are
involved?

A. The letter-of-credit process may seem cumbersome and confusing at
first, but it is not difficult once you become familiar with it. Letters
of credit can take many forms, but a typical transaction might involve
these steps:

- The exporter, upon receiving an order for a specified quantity of goods,
sends the buyer(importer) a pro forma invoice defining all conditions of
the transaction.

- The importer takes the pro forma invoice to the bank and applies for an
LC.

- After verifying the terms and reaching the appropriate credit decisions,
the importer's bankopens the LC and sends it to the exporter's bank.

- The exporter's bank authenticates the LC, verifying that it was issued
by a viable bank, andmails it to the exporter.

- The exporter compares the LC with the original pro forma invoice to
ensure that the exportercan ship before expiration and that all conditions
were incorporated as intended.

- The exporter prepares, generally with the help of a freight forwarder,
an invoice and apacking list. These documents must be completed exactly as
specified in the LC. The exporter also prepares a shipper's letter of
instruction or SLI and any other specialized documents required, e.g.,
export license and certificate of origin. (Check with a customs broker to
determine what documents are required in your case.)

- The freight forwarder receives the goods along with the completed
paperwork in accordancewith the terms of the LC.

- After the goods are shipped, the forwarder or exporter submits the LC
and documents to theexporter's bank.

- The exporter's bank verifies that all required documents are in
compliance with the letter ofcredit and forwards the documents package with
a draft to the importer's bank with wiring (payment) instructions.

- The importer's bank reviews all documentation and, if the documents meet
all requirements,credits the exporter's bank.

- The importer's bank simultaneously debits its customer's account.

- The exporter's bank credits the exporter's account.

- At the same time, the importer's bank releases documents to its
customer. With documents in hand, the importer picks up the shipment.

Your banker and freight forwarder will become important resources during a
letter-of-credit transaction. They will help to guide you through these
steps.

Q. How can I protect myself against foreign exchange risk?

A. The best way to protect yourself against foreign exchange risk is to
quote prices in U.S. dollars only. Conducting all business transactions in
U.S. dollars transfers the exchange risk to the buyer. This strategy may,
in some cases, alienate buyers who can receive better payment terms from
your competitors. If you must quote in your buyer's home currency, you
should take steps to protect yourself against the exchange risk.

When invoicing in foreign currencies, you must consider the effect of
foreign currency shifts on the price of the goods and services. There are
three different types of foreign exchange risks. Economic exposure is the
risk that your costs will rise due to movements in the exchange rate and
make your goods uncompetitive in the world market. Transaction exposure is
the risk that the exchange rate will move unfavorably from the time the
contract is initiated to the point of completion. Thus the amount of money
you receive for delivering the goods or services may be more or less than
expected due to a change in the exchange rate. Finally, translation
exposure is only applicable to firms with facilities overseas. This risk
arises from the need to consolidate financial statements in one currency
according to predetermined accounting rules. If you simply export goods
overseas, you are not exposed to this type of risk.

You can protect yourself from foreign exchange risks in various ways.
Again, the simplest strategy is to insist that all business transactions
occur in U.S. dollars. This strategy eliminates transaction and
translation risk but does not eliminate economic risk.

Some seasoned exporters reduce their exchange risk through factoring. In
factoring, the exporter transfers title to its foreign accounts receivable
on a discounted basis to a factoring house or factor. The factor assumes
responsibility for the credit, collection and record-keeping functions for
the client. The cost of factoring will vary depending on the services
offered and the risk level of sales transactions but is higher than selling
or borrowing on receivables. The higher costs, however, are often offset
by the value of services provided.

Another option for protecting yourself against exchange risk is hedging.
This ensures a set exchange rate and eliminates the risk of the currency
moving in an unfavorable direction. This is accomplished through the use
of forward and option contracts. You should consult with an international
banker experienced in the currency markets before entering into these
contracts.

Q. Will I need foreign credit insurance? Where can I obtain it?

A. Foreign credit insurance should be used to mitigate the inherent risks
of exporting. Foreign credit insurance can be divided into two distinct
risks: commercial and country. Commercial risk insurance offers
protection against a buyer's default on payment or bankruptcy. The
country, or political, risk insurance protects you in case of war,
sovereign acts or currency restrictions.

Foreign credit insurance can be obtained both in the private and public
sectors; for many small businesses, however, the private sector market is
extremely limited. The Export-Import Bank of the United States' (Eximbank)
credit insurance program insures both commercial and political risks.
Information on these programs can be obtained by contacting Eximbank. See
below for information on Eximbank's credit insurance programs.

Keep in mind, however, that not all risks are covered by export credit
insurance. For example, many policies do not cover losses due to disputes
between the buyer and seller. Check with Eximbank or a broker specializing
in export credit insurance to determine details of the coverage offered.
Also, the cost of credit insurance can reduce your profit margin. If you
choose to insure your accounts, be sure to consider that cost in the price
quoted to your buyer.

Founded in 1983, Marnico Carpet Mills, Inc. of Dalton, Georgia, attributes
100 percent of its sales to exporting. During its first year of operation,
Marnico exported to three countries and operated solely on secured terms
with overseas buyers. After the second year, the company obtained a
"new-to-export" insurance policy from Eximbank and increased exports to
seven countries, all in Latin America. The following year Marnico
"graduated" to Eximbank's Multi-Buyer Policy and received an export working
capital loan guaranteed by SBA. The insurance policies and SBA-guaranteed
working capital have allowed Marnico to expand into the Caribbean, the
Middle East, the Far East and Europe. Today the company sells to 26
countries around the world.

Q. How is financing service exports different from financing product
exports? Are there special tactics to consider?

A. Financing service exports presents special problems because there often
is no tangible asset for a lender to secure. Therefore, small service
providers must look to other ways of raising cash to finance their
international sales. Among the alternatives are --

- Internal financing, including extended payment terms from suppliers,
payment in advancefrom customers, mortgage refinancing and equipment
refinancing

- Equity financing, including investment from venture capitalists, private
placements,Small Business Investment Companies and public stock offerings

Service exporters should explore using advance or progress payments when
negotiating an international sale. Progress payments not only benefit the
exporter's cash flow but can provide assurance to a buyer that the service
will be delivered as promised.

Procurement opportunities for small business exporters also are available
through Multilateral Development Banks (MDBs):

- World Bank, phone: (202) 458-0118
- Inter-American Development Bank (IDB), phone: (202) 623-1000
- Asian Development Bank (ADB), phone: 011-63-2-632-6050
- African Development Bank (AfDB), phone: (202) 429-5160
- European Bank for Reconstruction and Development (EBRD),
phone: 011-44-71-338-6459

The U.S. Agency for International Development (USAID) also offers
significant bid opportunities. Both USAID and the MDBs provide information
on procurement opportunities through seminars and publications. See below
for more information on USAID.

GOVERNMENT EXPORT FINANCE ASSISTANCE
Several federal agencies, as well as certain state governments, offer loan
guarantee programs and other types of financing assistance for exporters.

U.S. Small Business Administration (SBA)

SBA provides business development and financial assistance to help small
businesses complete their export sales. The SBA offers loan guarantees to
help businesses obtain the capital needed to explore, establish or expand
international markets. As a prospective applicant, you should request that
your lender seek SBA participation if the lender is unable or unwilling to
make the loan directly.

The financing staff of each SBA office administers the loan guarantee
programs. You can contact the finance division of your nearest SBA office
for a list of participating lenders. The business development staff of each
SBA office can provide counseling on how to request export financing
assistance from a lender.

Export Working Capital Loan Guarantee Program

SBA offers export working capital loan guarantees to support single
transactions or a series of like transactions. Loan maturities are
generally for 12 months, with options to renew.

Loans can be used to finance labor and materials for manufacturing or
wholesaling for export or to finance foreign accounts receivable. Foreign
business travel and participation in trade shows are also among the
eligible uses, but a regular 7(a) business loan may be more appropriate for
these purposes.

Applicants must satisfy eligibility criteria established for all SBA loans.
Also, the applicant must have been in business -- not necessarily exporting
-- for at least 12 months' continuous operation before filing an
application.

Regular Business Loan Program

Small businesses that need money for fixed assets and for working capital
may be eligible for the SBA's regular 7(a) business loan guarantee program.
The SBA can guarantee up to 90 percent of a bank loan up to $155,000. For
larger loans, the maximum guarantee is 85 percent up to $750,000. Loan
guarantees for fixed-asset acquisition have a maximum maturity of 25 years.
Guarantees for general-purpose working capital loans have a maximum
maturity of seven years.

To be eligible, the applicant's business generally must be independently
owned, operated for profit and fall within size standards set by SBA.
Export trading companies (ETCs) and export management companies (EMCs) also
may qualify for the SBA's business loan guarantee program.

The International Trade Loan Program

The International Trade Loan Program provides long-term financing to help
small businesses compete more effectively and to expand or develop export
markets. No debt payment is allowed. Proceeds can be used to buy land and
buildings; build new facilities; renovate, improve or expand existing
facilities; and purchase or recondition machinery, equipment and fixtures.
The working capital portion of the borrowing could be in the form of either
an ERLC or a portion of the term loan.

Loan maturities cannot exceed 25 years, excluding the working capital
portion of the financing. The SBA's guaranty cannot exceed 85 percent of
the loan amount. The agency's maximum share for facilities or equipment
loans is $1 million, plus $250,000 for working capital.

Applicants must establish either of the following to meet eligibility
requirements:

- Loan proceeds will significantly expand existing export markets or
develop new ones.

- The applicant's business is adversely affected by import competition.

Small Business Investment Company Financing

A Small Business Investment Company (SBIC), approved and licensed by the
SBA, may also provide equity or working capital exceeding the agency's
$750,000 statutory maximum. Unlike the SBA, SBICs can invest in export
trading companies in which banks have equity participation as long as other
SBIC requirements are met.

Export-Import Bank of the United States

The Export-Import Bank of the United States (Eximbank) is an independent
federal government agency responsible for assisting the export financing of
U.S. goods and services through a variety of insurance, loan and guarantee
programs. Eximbank has undertaken a major effort to reach more small
business exporters with improved financing facilities and services.

Information Service

Eximbank's toll-free hotline provides information on seminars and the
programs available to finance the sale of U.S. goods and services abroad.
The phone number is 1-800-424-5201.

INSURANCE PROGRAMS

Export credit insurance programs reduce an exporter's risk and can be
obtained through an insurance broker or from Eximbank's Insurance Division.

A wide range of policies is available to accommodate many different export
credit insurance needs. Insurance coverage --

- protects the exporter against the failure of foreign buyers to pay their
credit obligations forcommercial or political reasons,

- encourages exporters to offer foreign buyers competitive terms of
payment,

- supports an exporter's prudent penetration of higher risk foreign
markets and

- gives exporters and their banks greater financial flexibility in
handling overseas accounts receivable.

Two policies designed for small businesses are the new-to-export and
umbrella policies. Each is a short-term (up to 180 days) policy, under
which, Eximbank assumes 95 percent of the commercial and 100 percent of the
political risk involved in extending credit to the exporter's overseas
customers. These policies free the smaller exporter from "first loss"
commercial risk deductible provisions that are usually found in other
insurance policies. This special coverage is available to companies that
are just beginning to export, or have an average annual export credit sales
volume of less than $2,000,000 and meet the SBA definitions of small
business.

Pre-export Program

The Working Capital Guarantee Program assists small businesses in obtaining
crucial working capital to fund their export activities. The program
guarantees 100 percent of the principal and interest on working capital
loans extended by commercial lenders to eligible U.S. exporters. The loan
may be used for pre-export activities such as the purchase of inventory,
raw materials, the manufacture of a product or marketing. Eximbank requires
the working capital loan to be secured with inventory, accounts receivable
or by other appropriate collateral.

Direct and Intermediary Loans

Eximbank provides two types of loans: direct loans to foreign buyers of
U.S. exports and intermediary loans to fund commercial lenders that extend
loans to foreign buyers of U.S. capital goods and related services. Both
the loan and guarantee programs cover up to 85 percent of the U.S. export
value, with repayment terms of one year or more.

Direct or intermediary loans are offered at the lowest interest rate
permitted under the Organization for Economic Cooperation and Development
arrangement for the market and term.

GUARANTEE PROGRAMS

Guarantees by Ex-im bank provide repayment protection for private sector
loans to credit-worthy buyers of U.S. capital equipment and services. The
guarantee is available alone or may be combined with an intermediary loan.

Most guarantees provide comprehensive coverage of both political and
commercial risks but political-risks-only coverage is also available. The
guarantee covers 100 percent of principal and interest.

Contact: Marketing Division
Export-Import Bank of the United States
811 Vermont Avenue, N.W.
Washington, DC 20571
(202) 566-4490

U.S. Department of Commerce

The U.S. Department of Commerce provides trade finance counseling through
the U.S. & Foreign Commercial Service (US&FCS). This field network of 70
domestic offices and 170 foreign posts provides counseling on federal,
state and private trade finance resources and provides assistance in using
these resources.

Contact: For more information and/or the telephone number of the US&FCS
office nearest you, call the Trade Information Center at 1-800-USA-TRADE
(1-800-872-8723).

U.S. Department of Agriculture

The U.S. Department of Agriculture's (USDA) Foreign Agricultural Service
(FAS) administers the Market Promotion Program (MPP), which helps U.S.
producers and other organizations finance, through funds from USDA's
Commodity Credit Corporation (CCC), promotional activities for U.S.
agricultural products. The MPP is intended to encourage the development,
maintenance and expansion of commercial export markets for agricultural
commodities. Under the MPP, funds from the CCC are used to partially
reimburse program participants conducting specific foreign market develop-
ment projects for eligible products in specified countries. Proposals for
MPP programs are developed by trade organizations and private firms and
submitted to USDA by a deadline specified in the program announcement USDA
publishes annually in the Federal Register.

USDA has approved MPP programs to promote a wide variety of U.S.
commodities in almost every region of the world. Activities financed by
the program vary by commodity and include activities such as market re-
search, consumer promotions and technical assistance.

Contact: Marketing Operations Staff at (202) 720-5521

Agency for International Development

The U.S. Agency for International Development (USAID) is the principal
federal agency that implements the U.S. Foreign Economic Assistance Program
in nearly 100 countries throughout the developing world. USAID commits
loans and awards grants to eligible USAID-recipient countries. From these
loans and grants flow technical assistance projects and commodity programs
implemented through the provision of services and/or commodities from U.S.
suppliers.

USAID's Center for Trade & Investment Services (CTIS) promotes increased
business activity between U.S. businesses and foreign entrepreneurs in
Asia, the Near East, Africa, Latin America, Eastern Europe and the Newly
Independent States of the former Soviet Union. CTIS provides information
on USAID-financed procurement opportunities.

Contact: U.S. Agency for International Development
Center for Trade & Investment Services
Washington, DC 20523-0229
(202) 663-2660 or (800) USAID-4-U


USAID's Office of Small and Disadvantaged Business Utilization/Minority
Resource Center (OSDBU/MRC) maintains the USAID Consultant Registry
Information System (ACRIS). ACRIS is an automated database that describes
the capabilities of U.S. businesses, organizations and institutions that
have expressed interest in participating in USAID-financed technical
assistance projects. The Office also maintains the mailing list for the
USAID Procurement Information Bulletin, which announces intended procure-
ment opportunities of USAID-financed commodities.

Contact: U.S. Agency for International Development
Office of Small and Disadvantaged Business
Utilization/Minority Resource Center
Washington, DC 20523-1414
(703) 875-1551

Overseas Private Investment Corporation

The Overseas Private Investment Corporation (OPIC) provides project
financing, investment insurance and a variety of investor services for U.S.
companies in some 140 developing nations and emerging economies throughout
the world. To encourage economic growth and investment in the countries in
which OPIC programs are available, OPIC offers a multitude of financial
services:

- Finance -- To foster investment, OPIC offers medium- and long-term
project financing. Direct loans are available to projects sponsored by
American small businesses. For larger projects, OPIC will guarantee loans
to projects sponsored by U.S. investors, starting at $2 million per
project. OPIC also sponsors several funds offering equity investment.

- Insurance -- To mitigate risks of investing overseas, OPIC insures U.S.
investments againstpolitical violence, inconvertibility of currency and
expropriation.

- Investor Services -- For companies considering overseas investment, OPIC
offers a variety of fee-based services, including feasibility studies,
investment missions, a database of business opportunities and business
outreach.

Contact: Information Officer
Overseas Private Investment Corporation
1100 New York Avenue, N.W.
Washington, DC 20528
(202) 336-8799; fax (202) 408-5155

Printed material is available via telefax, (202) 336-8700.

U.S. Trade and Development Agency

The U.S. Trade and Development Agency (TDA) provides grants to fund
feasibility studies and other planning services for major projects that are
economic development priorities of recipient countries. TDA-funded studies
must be performed by U.S. countries or consortia. A host country plays an
active role in developing the scope of work for the study, selecting on a
competitive basis the U.S. firm to complete it and monitoring the progress
of the study. By carrying out a TDA-funded study, a U.S.company es-
tablishes a presence in the country and is able to develop long-term
relations with host-country officials and project managers that can lead
to additional business opportunities.

TDA operates in developing and middle-income countries. The types of
projects TDA funds include energy and natural-resource development,
transportation, telecommunications and the environment. TDA reviews
project proposals to determine whether or not they meet project criteria,
which include development priority, U.S. export potential, funding
availability and competition.

Other TDA activities include --

- Definitional Missions -- Once a promising project is identified, TDA
hires an assessment team made up of U.S. technical experts to conduct a
definitional mission (DM). DM studies are performed by small and
minority-owned businesses. The purpose of the DM is to compile information
critical to TDA's internal selection process. Based on the advice of the
DM team, among other factors, TDA determines whether to offer a grant for
the feasibility study. DM consultants are precluded from participating in
TDA-funded feasibility studies.

Contact: DM Hotline (703) 875-7447

- Feasibility Studies -- TDA funds studies to determine the technical,
economic and financial feasibility of major development projects.
Feasibility studies provide detailed data that support decisions on whether
and how to proceed with project implementation. Feasibility study
contractors are selected by host countries using competitive procedures.
Requests for proposals are listed in the Commerce Business Daily.

Contact: For on-line information on Commerce Business
Daily: (202) 482-0632
For subscription information: (202) 783-3238

- TDA Bi-Weekly -- TDA publishes a newsletter called the TDA Bi-Weekly,
which provides U.S. suppliers and manufacturers with up-to-date information
on TDA-supported projects. Small businesses may identify subcontracting
opportunities through the publication.

Contact: For subscription information: (703) 875-4246

State Export Financing Programs

A number of state-sponsored export financing and loan guarantee programs
are available. Many cities and states have established cooperative
programs with the Eximbank and can provide specialized export finance
counseling. Details of these programs are available through each state
department of commerce or trade office.

APPENDIX A

U.S. SMALL BUSINESS ADMINISTRATION DISTRICT OFFICES

ALABAMA: 2121 Eighth Avenue North, Suite 200, Birmingham, AL 35203-2398;
(205) 731-1344

ALASKA: 222 West 8th Avenue, Room 67, Anchorage, AK 99513; (907) 271-4022

ARIZONA: 2828 North Central Avenue, Suite 800, Phoenix, AZ 85004-1025;
(602)
640-2360

ARKANSAS: 2120 Riverfront Drive, Suite 100, Little Rock, AR 72202; (501)
324-5278

CALIFORNIA: 2719 North Air Fresno Drive, Fresno, CA 93727-1547; (209)
487-5189

330 North Brand Boulevard, Suite 1200, Glendale, CA 91203-2304; (213)
894-2956

901 West Civil Center Drive, Suite 160, Santa Ana, CA 92703-2352; (714)
836-2494

Federal Building, Suite 4-S-29, 880 Front Street, San Diego, CA 92188-0270;
(619) 557-7252

211 Main Street, 4th Floor, San Francisco, CA 94105-1988; (415) 744-8489

COLORADO: 721 19th Street, Suite 426, Denver, CO 80202-2599; (303)
844-3984

CONNECTICUT: 330 Main Street, 2nd Floor, Hartford, CT 06106; (203)
240-4644

DELAWARE: See listing for King of Prussia, PA, office

DISTRICT OF COLUMBIA: 1110 Vermont Avenue, N.W., 9th Floor, Washington, DC

20005; (202) 606-4000

FLORIDA: 1320 South Dixie Highway, Suite 501, Coral Gables, FL 33146-2911;
(305) 536-5521

7825 Baymeadows Way, Suite 100-B, Jacksonville, FL 32256-7504; (904)
443-1900

GEORGIA: 1720 Peachtree Road, N.W., 6th Floor, Atlanta, GA 30309; (404)
347-4749

HAWAII: 300 Ala Moana Boulevard, Room 2213, Honolulu, HI 96850-4981; (808)
541-2990

IDAHO: 1020 Main Street, Suite 290, Boise, ID 83702-5745; (208) 334-1696

ILLINOIS: 500 West Madison Street, Suite 1250, Chicago, IL 60661-2511;
(312)
353-4528

INDIANA: 429 North Pennsylvania Street, Suite 100, Indianapolis, IN
46204-1873; (317) 226-7272

IOWA: 373 Collins Road, N.E., Suite 100, Cedar Rapids, IA 52402-3147;
(319)
393-8630

Federal Building, Suite 749, 210 Walnut Street, Des Moines, IA 50309;
(515)
284-4422

KANSAS: 100 East English Street, Wichita, KS 67202; (316) 269-6273

KENTUCKY: 600 Dr. M.L. King, Jr. Place, Room 188, Louisville, KY 40202;
(502) 582-5971

LOUISIANA: Ford-Fisk Building, Suite 2000; 1661 Canal Street, New Orleans,
LA 70112; (504) 589-2354

MAINE: Federal Building, Room 512, 40 Western Avenue, Augusta, ME 04330;
(207) 622-8378

MARYLAND: 10 South Howard Street, Room 608, Baltimore, MD 21202; (410)
962-4392

MASSACHUSETTS: 10 Causeway Street, Room 265, Boston, MA 02222-1093; (617)
565-5590

MICHIGAN: Patrick V. McNamara Building, Suite 515, 477 Michigan Avenue,
Detroit, MI 48226; (313) 226-6075

MINNESOTA: Butler Square, Suite 610-C, 100 North 6th Street, Minneapolis,
MN 55403-1563; (612) 370-2312

MISSISSIPPI: 101 West Capitol Street, Suite 400, Jackson, MS 39201; (601)
965-4378

MISSOURI: 323 West 8th Street, Suite 501, Kansas City, MO 64105; (816)
374-6708

815 Olive Street, Room 242, St. Louis, MO 63101; (314) 539-6600

MONTANA: Federal Building, Room 528, 301 South Park, Helena, MT 59626;
(406) 449-5381

NEBRASKA: 11145 Mill Valley Road, Omaha, NE 68154; (402) 221-4691

NEVADA: 301 East Stewart Street, Room 301, Las Vegas, NV 89125-2527; (702)
388-6611

NEW HAMPSHIRE: 143 North Main Street, Suite 202, Concord, NH 03302-1257;
(603) 225-1400

NEW JERSEY: Military Park Building, 4th Floor, 60 Park Place, Newark, NJ
07102; (201) 645-2434

NEW MEXICO: 625 Silver Avenue, S.W., Suite 320, Albuquerque, NM 87102;
(505) 766-1870

NEW YORK: 111 West Huron Street, Room 1311, Buffalo, NY 14202; (716)
846-4301

26 Federal Plaza, Room 3100, New York, NY 10278; (212) 264-2454

Federal Building, Room 1071, 100 South Clinton Street, Syracuse, NY 13260;
(315) 423-5383

NORTH CAROLINA: 200 North College Street, Suite A-2015, Charlotte, NC
28202-2137; (704) 344-6563

NORTH DAKOTA: Federal Building, Room 218, 657 Second Avenue North, Fargo,
ND
58108- 3086; (701) 237-5131

OHIO: 1111 Superior Avenue, Suite 630, Cleveland, OH 44144-2507; (216)
522-4180

2 Nationwide Plaza, Suite 1400, Columbus, OH 43215-2592; (614) 469-6860

OKLAHOMA: Federal Building, Suite 670, 200 N.W. 5th Street, Oklahoma City,
OK 73102; (405) 231-4301

OREGON: 222 South West Columbia, Suite 500, Portland, OR 97201-6605; (503)
326-2682

PENNSYLVANIA: 475 Allendale Road, Suite 201, King of Prussia, PA 19406;
(215) 962-3804

960 Penn Avenue, 5th Floor, Pittsburgh, PA 15222; (412) 644-2780

PUERTO RICO: Citibank Towers, Plaza Level, 252 Ponce de Leon Avenue, Hato
Rey, PR 00918; (809) 766-5572

RHODE ISLAND: 380 Westminster Mall, 5th Floor, Providence, RI 02903;
(401)
528-4561

SOUTH CAROLINA: 1835 Assembly Street, Room 358, Columbia, SC 29201; (803)
765-5376

SOUTH DAKOTA: First Financial Center, 110 South Phillips, Suite 200, Sioux
Falls, SD 57102; (605) 330-4231

TENNESSEE: 50 Vantage Way, Suite 201, Nashville, TN 37228-1500; (615)
736-5881

TEXAS: 10737 Gateway West, Suite 320, El Paso, TX 79935; (915) 540-5676

4300 Amon Carter Boulevard, Suite 114, Ft. Worth, TX 76155; (817) 885-6503

222 East Van Buren, Suite 500, Harlingen, TX 78550; (210) 427-8533

9301 Southwest Freeway, Suite 550, Houston, TX 77074-1591; (713) 773-6500

1611 10th Street, Suite 200, Lubbock, TX 79401; (806) 743-7462

North Star Executive Center, 7400 Blanco Road, Suite 200, San Antonio, TX
78216-4300; (512) 229-4353

UTAH: 125 South State Street, Room 2237, Salt Lake City, UT 84138-1195;
(801) 524-5804

VERMONT: 87 State Street, Room 205, Montpelier, VT 05602; (802) 828-4422

VIRGINIA: Federal Building, Room 3015, 400 North Eighth Street, Richmond,
VA
23240; (804) 771-2400, ext. 122

WASHINGTON: Federal Building, Room 1792, 915 Second Avenue, Seattle, WA
98174-1088; (206) 220-6523

West 601 First Avenue, Spokane, WA 99204-0317; (509) 353-2800

WEST VIRGINIA: 168 West Main Street, 5th Floor, Clarksburg, WV 26301;
(304)
623-5631

WISCONSIN: 212 East Washington Avenue, Room 213, Madison, WI 53703; (608)
264-5542

WYOMING: 100 East B Street, Room 4001, Casper, WY 82602-2839; (307)
261-5761

APPENDIX B

U.S. EXPORT ASSISTANCE CENTERS

U.S. Export Assistance Centers (EACs) offer, under one roof, the services
and programs of SBA, the U.S. Department of Commerce and the Export-Import
Bank of the United States, as well as other public/private trade partners.
Four initial EAC sites opened in winter 1994.

BALTIMORE: World Trade Center, 401 East Pratt Street, Suite 2432,
Baltimore, MD 21202; (410) 962-4539

CHICAGO: Xerox Center, 55 West Monroe Street, Suite 2440, Chicago, IL
60603; (312) 353-8040

LOS ANGELES: One World Trade Center, Suite 1670, Long Beach, CA 90831;
(310) 980-4550

MIAMI: Trade Port Building, 5600 Northwest 36th Street, 6th Floor, Miami,
FL 33166; (305) 526-7425



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