EWCP means export working capital program. It is a loan program that is backed up by the U.S. Small Business Administration (SBA). EWC is a program that allows small business to borrow substantial amount of money to finance the export of both labor and materials of the company. The export working capital can also be used as payment guarantee or performance bond. The SBA and the U.S. Export Assistance Center are the public office that handles EWCP loan applications.
The Purpose of Export Working Capital Program
The main purpose of EWCP is to help all small business in the United State that are interested on investing both time and resources in the export industry. The export working capital availed by eligible business can be used to:
Back-up the production of commodities for export.
Most small businesses do not have big capitals to finance or even develop export leads. And even if they were able to find clients, they don’t have the capability to close the deal mostly due financial constraints. With the export working capital program, endeavors like this becomes possible.
Provide both short-term and long-term working capital to exporters.
All businesses need capital to expand. EWCP caters to small business owners who are looking to export their products and services. A $250,000 working capital can be applied for and it is usually payable within 5 to 10 years. The SBA guarantees a big percentage of every EWCP loan released.
Finance receivables coming from export sales.
Sometimes, receivables resulting from the sales of exported goods take too long to materialize and working capital is needed soon to start export production again. With EWCP, these problems are easily solved.
Features of Export Working Capital Loans
Some banks, more particularly the Export-Import Bank guarantees 90% of the credit risk assumed by the lender. This move helps export companies eke out the financing they require for their line of business.
Working capitals given by the program are guaranteed by Export-Import Bank and is secured by the accounts export account receivable, as well as the export inventory.
EWCP can be used to issue standby Letter of Credits for an exporter’s performance bond or bid needs. But to qualify for such loan, the services or goods to be shipped should have at least 50% U.S. content. It has to be shipped from a U.S. port as well.