SBA Loan Program for International Trade Businesses: Dangers

Like with most business loans, an SBA loan for international trade businesses can become a danger to your small business. The Small Business Administration, or SBA, offers a program called the loan program for international trade business, or alternatively the SBA International Trade Loan program. This program is designed to help small businesses enter the international world of trade and succeed in export endeavors. However, because international trade is always a somewhat risky endeavor for small businesses, a loan could become a burden or even a danger to your business. Knowing the facts about the SBA loan program for international trade can help you make smart choices when it comes to your small business and the global market.

How the SBA International Trade Loan Program Works

With the SBA International Trade Loan Program, the loan is provided by a third-party lender. This lender is typically a bank, of varying size and stature, which has an established relationship with the SBA and is an approved lender for this type of loan. The SBA then serves as a guarantor of the loan, thereby creating a more optimal situation for the lender by decreasing their amount of risk as the lender.

Finding the Best Lender

Not all lenders of SBA loans are the same and it is important that you shop around a bit to find the one that best suits your business's needs and also provides good interest rates. Interest rates are decided upon by the lender, not by the SBA, so it is important that you find a lender whose rates are competitive and low. Taking on a loan that has high interest rates can create a danger to your business. If your venture does not go as well as you had hoped and you find that you are struggling to make loan repayments, a high interest rate can further sabotage your once global dreams. In short, stick to lower interest rates from reputable lenders.

Surviving in a Larger Market

By entering the international market of exports, you will expose yourself to a much wider variety of business experiences than a typical small business that stays local. However, it can be difficult to enter such a large and often competitive market and you need to be aware of the danger your business could encounter by taking out an SBA loan and attempting to go global. To avoid finding yourself in financial trouble from an international plan gone awry and a loan that requires repayment, have a good idea of what you want to do and how you will do it before you apply for the loan. This can save your business a lot of wasted money and save you from one of the dangers of an SBA loan from the International Trade Loan program. While a preconceived plan may not be foolproof, it can help you deal with pitfalls if they should arise as you will already have troubleshot how to pull yourself out.