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Small Business Digest


Financing For Global Expansion, Shipping Available To Small Businesses

Editor's note: A related story on how to grow sales through overseas markets is available here.

Getting financing for activities abroad has always been difficult for small business leaders.

In today’s tight lending sector, finding reliable, affordable financing sources poses additional difficult challenges.

Another impediment to obtaining loans by small- and medium-size companies to obtaining traditional financing is because financial providers want clear visibility and control of the collateral.

In addition, the collateral in question is often the goods that are in transit on the ocean, in the air or stored in an international warehouse and therefore traditional banks are hesitant to lend against it.

Into this breech, the financial-services arm of an international shipping company UPS Capital is offering specialized services to small and medium businesses to help them obtain working capital to expand their companies into the global market.

Created in 1998, UPS Capital is able to lend on the value of in-transit and warehoused inventory because UPS manages the in-transit shipments. It also owns and operates the warehouses in international locations, which enables the company to have “clear visibility and control” of the collateral.

“As the economy has hardened over the past few years, traditional access to working capital for small and medium companies has become difficult, leaving them with limited options to obtain reasonable financing,” says Chris Vukas, UPS Capital’s vice president of marketing and technology.

Amerinada Distributors, a Long Beach, Calif.,-based importer and distributor of indoor horticultural supplies and accessories, has taken advantage of UPS Capital’s unconventional financing.

Under UPS Capital’s Cargo Finance program, Amerinada Distributors is advanced 50% of the value of its in-transit inventory to help pay suppliers, who want payment before goods are shipped. The program allows Amerinada access to funds much earlier in the supply chain and provides needed cash to reinvest in their business and plan for growth. 

“Cash flow was a real problem for us,” says Sheldon Aberman, co-founder and chief executive officer. “Our company has a high product turnover, and the line of credit has helped us free up more cash, allowing us to get products in faster and better meet customer needs.”

Businesses can qualify for the Cargo Finance loan if it meets specific requirements.  The business must: be based in the U.S.; import at least one shipment of finished goods per month; have been operating for at least three years; have been trading internationally for at least two years; have a good payment history with trade creditors; and be willing to transport imports within the UPS network.

Vukas says UPS Capital provides such financing programs to ensure that small and medium businesses achieve growth in a globalizing world.

“There is compelling evidence,” Vukas says, “that sourcing from and selling to customers in new global markets can provide these companies with a dramatic boost to their bottom lines.”

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