Small Business is the backbone and foundation of the U.S. economy. Approximately 99% of all businesses in the United States are deemed 'Small' (generally defined as an independent business with fewer than 500 employees) by the U.S. Small Business Administration. These businesses produce over 50% of the national GDP and employ over 50% of all labor, a vital part of our economic success.
Small Business are traditionally characterized as follows:
Thinly capitalized, relying on trade and bank credit to finance sales growth.
No dedicated Credit and Collections Treasury function until sales reach a certain level that justifies the investment.
With scarce working capital, little flexibility to extend more competitive payment terms to their customers and prospects in order to grow sales in a safe manner.
Difficulty in opening export markets because of the upfront expense of marketing and sales coupled with the higher risks of dealing with international customers who want payment terms.
Small Businesses can use Trade Credit Insurance to give them the assurance that they will 'get paid' by both International and U.S. Customers. Several programs are worth noting:
Export (International) Customer Credit Insurance.
Of note is the Small Business Export Credit Insurance Policy and Program offered by The Export-Import Bank of the United States (Ex-Im Bank). Since its founding in 1934 as the official Export Credit Agency of our country, Ex-Im Bank has provided insurance and financing assistance to U.S. exporters, especially Small Business. Ex-Im Bank's Small Business Export Credit Insurance Policy is very competitive with the following parameters:
- Valuable Sales Expansion Tool that
- Mitigates Risks ('Getting Paid' by International Buyers)
- Expands Markets (By offering competitive payment terms)
- Facilitates Working Capital Financing (Using Foreign A/R as Collateral)
- Foreign Commercial Risks Covered: Commercial Losses resulting from insolvency, bankruptcy, default, non-acceptance of goods - 95%
- Foreign Political Risks Covered: Losses resulting from war, cancellation of import licenses, currency inconvertibility - 100%
- Terms up to 180 days (capital equipment - 360 days) and
- First Loss Deductible - NONE!
- Small Business by SBA Size Standards,
- Annual Export Credit Sales < $7,500,000,
- 1 year Positive Operating Profit History,
- Positive Net Worth
- Competitive Premiums (Term/Buyer Tiered, Simple to Use)
- Monthly Premium Payments (pay only for what you use, based on monthly shipments) - NO MINIMUM PREMIUM!
- U.S. Content Requirement - 51% (materials and Labor). Click here for 'New', more favorable Small Business U.S. Content Requirements for ALL U. S. Business exporters deemed to be 'Small Business' per current SBA Size Standards
- Credit Limits: Named Insured Limits and Discretionary Credit Limits
- Past Due Reporting ($25,000/90 days PD), Claims Window
- Assignment of Policy Proceeds to Lenders
World Trade Consult, LLC is a registered Broker of Export Credit Insurance issued by the Export-Import Bank of the United States (Ex-Im Bank). Ex-Im Bank's Small Business Export Credit Insurance Policy provides a low cost solution to the needs of our small businesses who want to safely and profitably grow in the global markets.
For more information on Ex-Im Bank's financial support programs, visit Exim Bank
Domestic (U.S.) Customer Credit Insurance.
Several insurers have a strong focus on Small Business, led by Euler Hermes ACI, the largest private provider of Trade Credit Insurance globally. While premiums reflect the lower range of risk offered by a Small Business, insurance coverage is available that provides benefits that overcome the above issues. For example, with a Trade Credit Insurance policy, a Small Business can assign the proceeds of the policy to its lender, accessing greater amounts of working capital to finance growth in sales. The insurer acts as the outsourced Credit and Collections Department of the Small Business until it grows to afford its own internally staffed function. Losses due to unexpected bankruptcy of a large client or two can be weathered, allowing the Small Business to sidestep significant financial losses and even perhaps its own demise.