The “Made in America” brand remains strong, with a growing number of businesses bringing production and jobs back to the U.S. from overseas.
Recent studies indicate on-shoring is likely to increase over the next several years due to rising transportation costs and as companies take advantage of America’s high workforce productivity and strong quality control.
Do You Plan to Bring Production Home? The U.S. Small Business Administration’s International Trade Loan (ITL) Program Can Help!
The U.S. Small Business Administration’s ITL program provides small businesses with capital to finance their fixed assets, including real estate, and working capital needs. This program offers private lenders a 90% guarantee on loans as an incentive to encourage lending to growing small businesses.
Small businesses may use the ITL program to on-shore in one of two ways:
1. Do you plan to on-shore to strengthen exports?
Small businesses which currently manufacture products abroad, but want to relocate production to the U.S. for the purposes of exporting may utilize the ITL program. These businesses may want to relocate to the U.S. to take advantage of increased labor productivity, proximity to raw materials, quality control, re-linking their supply chain or other factors. Small businesses would qualify even if they intend to sell only one product abroad.
2. Do you plan to on-shore to Counter Import Competition?
Small businesses which currently manufacture abroad, but sell to the U.S. market, can take advantage of the loan program. These businesses must demonstrate an adverse impact to their business due to import competition, substantiated either by a narrative explanation and the company’s financial statements or by a finding of economic injury issued by the International Trade Commission  or the U.S. Department of Commerce .
How to Apply for the ITL Program:
A small business exporter seeking an ITL must apply to an SBA-participating lender. The lender will submit a completed Application for Business Loan (SBA Form 4), including all exhibits, to the SBA.
Small businesses may contact their local U.S. Export Assistance Center for further information, including a list of eligible SBA lenders in their area, by visiting the SBA at www.sba.gov/international .
Key Loan Terms
Financing: Total financing up to $5 million dollars.
Guaranty: SBA can guaranty up to 90% of an ITL up to a maximum of $4.5 million, less the guaranteed portion of other SBA loans outstanding to the borrower. The maximum guaranty for a working capital component is $4 million.
Interest Rate: Lenders may charge a maximum interest rate between 2.25% and 2.75% points above the prime rate (as published by The Wall Street Journal), depending upon the maturity of the loan.
Loan Term Maturity: Up to 10 years on loans for equipment unless the useful life exceeds 10 years. Up to 25 years for real estate. Blended-average maturity for loans with a mixed use of fixed asset and working capital financing. Maturities are typically limited to 10 years on the working capital portion of the ITL.
Use of Proceeds
Proceeds of the loan’s portion for facilities and equipment may be used to repatriate production facilities as well as to construct new capacity within the territorial U.S. ITL financing is authorized to acquire, construct, renovate, modernize, improve or expand both facilities and equipment in the U.S.
The small business must produce goods or services involved in international trade and must not sell only to the U.S. market, unless its eligibility is based on being adversely impacted by imports.
Proceeds may refinance debt that is not structured under reasonable terms and conditions, including any debt that qualifies for refinancing under the standard SBA 7(a) Loan Program.
Applicants must meet eligibility requirements for SBA’s standard 7(a) Loan Program.
Applicants must establish that the loan will enable the business to expand or develop an export market, or establish that the business had been adversely impacted by imports, and that the ITL will allow the business to regain its competitive position.
Alternatively, the business could submit a finding of economic injury, which must be substantiated by the International Trade Commission or the U.S. Department of Commerce.
Only collateral located in the U.S., including its territories and possessions, is acceptable.
First lien on property or equipment financed by the ITL or on other assets of the business is required. However, an ITL can be secured by a second lien position if the SBA determines there is adequate assurance of loan payment.
Additional collateral, including personal guaranties and those assets not financed with ITL proceeds, may be required as appropriate.