Streamlined export finance program off to slow start.

The federal government's latest export finance program has generated plenty of interest, but few loans.

The U.S. Small Business Administration and the Exports-Import Bank launched a coordinated Export Working Capital Program on Oct. 1 designed to get more credit quickly into the hands of small, and mid-sized exporters.

Officials hope to attract lenders by streamlining everything from the application to the guarantee percentage. Despite improvements over earlier programs, banks have been slow to use the program. In its first. month, the SBA guaranteed eight loans totaling less than $2 million.

Nonetheless, bankers familiar with the program believe it is only a matter of time before the joint effort takes off.

"This is so new that we have not actually done one under the new SBA program," said Gary Collins, a vice president in the trade banking group at NationsBank in Baltimore. "But we do expect to market and use both of these programs interchangeably."

Irene Fisher, assistant administrator for the SBA's Office of International Trade, said the agency first had to get the message about the program out to its 68 district offices. Once there, the offices had to develop a marketing plan.

But Ms. Fisher expects district officers and lenders to become more comfortable as they use the program. "I think we will see a learning curve of about a year or two in this program," she said.

The program replaces the SBA's Export Revolving Line of Credit and the International Trade Loan Program. Both were seldom used, a fact attributed to complex document requirements, program limits, and a lower guarantee than was available through Export-Import programs.

The harmonization of the programs lowered the Export-Import Bank's guarantee to 90% from 100%, while the SBA raised its to the same level from 85%. The SBA will now guarantee loans up to $833,333, its statutory guarantee maximum.

The' Export-Import Bank handles everything above $833,333. At the same tune, the bank expanded its small business insurance policies to include companies with up to $3 million of revenue. The Small Business Policy insures the lender completely against political risk and provides 95% coverage on the commercial risk.

Unlike other SBA programs, borrowers can apply directly to the SBA for a preliminary commitment, which they can then take to a lender. The SBA is also allowing lenders to charge whatever the market will bear in fees and interest.

Despite its slow start, the program is already putting financing into the hands of small exporters.

At First National Bank of Maryland, for example, the institution used the SBA's guarantee to provide a $450,000 line of credit to a company exporting a high-tech line of distillation equipment for use in foreign hospitals and labs.

Traditionally, a lender would require the company to manufacture, sell, and ship the product before providing financing -- which is contrary to the borrower's needs.

"Typically, these companies go out and get the sales but they don't have the money to allow thereto fill the order,"said Amos Meredith, a vice president in commercial lending for the First Maryland subsidiary. "Under this program, the bank can advance as much as 100% of the manufacturing cost."

Other bankers are looking forward to greater flexibility. Bill Cummins, a group vice president for trade finance with Birmingham, Ala.-based South Trust, aid the new program will help exporters that must deal with foreign governments.

In many cases, exporters need a letter of credit that functions as a bid bond, which typically covers between 3% and 5% of the bid amount. If the company wins the contract, it then has to post a performance bond worth between 10% and 15% of the contract. The old SBA program did not accommodate bankers and exporters looking to support a bank issuing these letters of credit.

Ultimately, the advantage to the new program is in the procedures. With paperwork amounting to one form in addition to the amount of loan documentation already handled by the company, most lenders can receive approval from the SBA within seven working days.

"The deals tend to go away if we can't respond in a reasonable amount of time," Mr. Cummins said. "With this, we tell them we can deliver these loans quickly."

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