Business Financing Options for the Global Market
Thanks to the advent of the Internet, it is easier than ever for a small business to sell its wares to customers around the world. Worldwide expansion, however, is not without its expenses. Although websites and social networking allow entrepreneurs to market their firms in foreign nations, the creation of manufacturing and distribution networks, as well as the legal and compliance responsibilities often require a small business to spend capital before the first foreign product can be sold. When exploring financing options for global expansion, a small business has a few choices.
Small businesses that have good credit histories and accurate financial records may apply for a loan from a traditional financial institution to fund global market expansion. Also called a term loan, this type of financing is characterized by a regular repayment schedule and a fixed interest rate. There are two classes of term loans. An intermediate-term loan must be repaid through regularly scheduled payments in a time frame of fewer than three years. Alternatively, long-term loans must be repaid during a span of more than three years. In some cases, repayment schedules can last upwards of 20 years. It should be noted that financial institutions are typically hesitant to finance business expansion in economically or politically unstable regions.
An agency of the United States government, the Overseas Private Investment Corporation (OPIC) exists to “mobilize and facilitate the participation of United States private capital and skills in the economic and social development of less developed countries and areas, and countries in transition from non-market to market economies.” Operating in 150 countries in South America, Europe, Africa and Asia provides financing to small to medium-sized American business wishing to expand into the global market. In order to qualify for Small and Medium-Enterprise Financing, a business must have less than $250 million dollars in revenue. The purpose of this program is to provide financial support to businesses expanding to areas where traditional financial services firms are reluctant or unable to provide financing.
The United States Small Business Administration (SBA) offers various programs aimed at providing loans to small businesses for global expansion. The Export Working Capital Program provides “up to $2 million in short-term, transaction-specific working capital loans to U.S. small business exporters.” Alternately, Export Express Program provides small businesses with up to $250,000 which can be used to “buy or produce goods or to provide services for export.” Lastly, the International Trade Loan Program provides “U.S. businesses that are preparing to engage in or are already engaged in international trade, or are adversely affected by competition from imports with up to $2 million in financing to upgrade equipment and facilities.”
KJ Henderson has more than a decade of HR and talent acquisition experience. He has held roles at a Fortune 100 investment bank, a media conglomerate and at one of NYC's largest executive staffing firms. He currently heads recruitment sourcing at a major movie studio. He read literature at Oxford.