The International Trade Loan caters to American businesses with a presence around the world. This financing program encourages entrepreneurs to bring back jobs to America instead of outsourcing talent abroad. The U.S. Small Business Administration guarantees 90% on these loans as an incentive to entrepreneurs. Many businesses are tapping into the International Trade Loan to secure funding for their businesses. Good credit is essential, and one of the ways to improve your credit score is by acquiring tradelines. If you’re looking for credit tradelines, you can check out Coast Tradelines.
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What is the Use of Trade Loans?
Before you are approved for an international trade loan, you need to sell goods and products at the international stage. If you cater to just the U.S. market, you’re not eligible, unless you prove that you’re extremely hurt by imports. The U.S. Small Business Administration (SBA) requires that you put the funds toward services and equipment within America. For instance, you may use the funds to put up new structures, acquire merchandise, and expand your business. An International Trade Loan may also be used for debt refinancing and debt consolidation to ensure that the terms and conditions are reasonable.
Terms of an International Trade Loan
Entrepreneurs can access up to $5 million. The Small Business Administration (SBA) can guarantee up to $4.5 million. If the funds are being channeled into business operation, the SBA revises their rate of guarantee down to $4 million. The financial institutions approved by the SBA can offer international trade loans and levy an interest rate of between 2.25% and 2.75% above prime charges and contingent on the maturity of the loan. The Small Business Administration takes loan security only located in the U.S. The collateral is dependent on different factors.
International Trade Loan Eligibility
Some of the requirements to be eligible for the international trade loan include having fewer than 500 employees and an average of $7.5 million last three years’ income. You’re also required to demonstrate that the funds will enable your business to expand to new countries. If your company has been upset by imports, you’re required to demonstrate how the loan will enable you to gain your edge back.
Advantages of International Trade Loans
International trade loans are critical in expanding businesses and boosting revenue. The following are some of the reasons why trade loans appeal to entrepreneurs.
1. Minimized Risk of Bankruptcy
Trade loans usually have a loan repayment system that is tailored to the needs of the borrower, and so, there’s a low risk of defaulting or becoming bankrupt.
2. Higher Revenue
Entrepreneurs can leverage trade loans to improve the performance of their businesses. For instance, establishing new export markets comes with higher revenues.
3. Flexible
It’s terrible for an entrepreneur to encounter an opportunity and then lack funds to take advantage of the opportunity. But then they can rely on trade loans to bring their plans to life without inconveniencing themselves. The loan repayment is adapted to the circumstances of the borrower. This is a financing program that enables entrepreneurs to shoot for the stars.
4. Convenience
One of the difficulties of seeking a business loan from traditional financial institutions is the hefty bureaucratic procedures that are followed and the many papers that are signed. But trade loans don’t require excessive papers. The contracts are concise and executed simply, and there are no sudden fees that crop up when the transaction ends. Many entrepreneurs leverage international trade loans to fulfill their business growth goals.
5. Quick Availability of Funds
Traditional loans can take some time to get approved and released. And this can cause an entrepreneur to brave a moment of uncertainty. But with trade loans, the loan disbursement process is quick. And so, this enables you to get started with your plans within a short time. Trade financing is extremely reliable because of quick loan approval and fast funds availability.
Other Loan Products besides International Trade Loans
If you’re ineligible for international trade loans, or you decide to forego them, these are some of the other forms of loans that you can take out:
- SBA loans: the SBA provides various loan options that can help you expand your business and find new markets for your products.
- Traditional business loans: if you’re not eligible for a trade loan, you can always seek an ordinary business loan from various financial institutions.
Credit line: in this arrangement, you can take out a loan until you hit the limit. You can use as little or as much money as you would want to as long as you’re within the limit.