Exporting is a challenge, particularly when you are shipping goods to areas that many consider a financial risk.
Brandes International, an 80-year-old Cleveland company that exports truck and trailer components primarily to Latin America, found that out first-hand.
“Until the late ’90s, all of our business was done via a letter of credit,” says Jeff Therber, president of Brandes. “That changed practically overnight because of bad economic conditions. There was no credit being offered to the customers’ banks, and none from the banks to the customers. We found ourselves with a supplier base that had cold feet about exporting to these areas and customers who had no money.”
Therber was left with a market that had a demand for his product but no way to pay for it.
“We weren’t sure how we were going to conduct our business,” says Therber. “We were not sure whether we were going to have to change the nature of our business. We could have tweaked things here and there and stayed alive here, but our customers would have no access to materials they need to finish their products.”
Brandes needed financial assistance to get credit into the hands of his customers so he could sell them products. He met with Carlos Sosa, trade finance manager for Fifth Third Bank, who outlined a program that would solve his problems.
“We used the SBA Export Working Capital Program to take care of Jeff’s pre-export financing needs and offer terms to his customers,” says Sosa. “We combined the SBA program with a {U.S. Export-Import Bank} insurance policy.
“This problem is the type of thing we see on a regular basis. That’s why we have the SBA programs. It helps small and mid-size exporters get crucial financing. Most banks don’t like to lend to exporters on a collateral basis because the inventory is going overseas. Once the equipment is gone, it’s gone. They are reluctant to give exporters the money they need.”
The package has allowed Brandes to continue to supply its customers.
“We’re delighted with it,” says Therber. “We haven’t had any claims on our insurance policy. It’s been a near-perfect solution. Another big benefit of this is that we kept an American product on the road in those countries. If we could not supply them, they would produce their own crude axles or buy from China.
“If you are trying to get your hands on a solution like this, it’s important to find a technician like Carlos who knows how to use all the tools. The key to us was the tailoring of the package.”
Even with the combination of programs from two government agencies, the paperwork load is manageable. It takes about four weeks for the bank and government agencies to completely process the applications. The initial application requires more work than any subsequent renewals.
“The bank had to push a lot more paper than we have,” says Therber. “We have hell week once a year when it’s time for renewal, but that’s about it. At the end of the day it is an inexpensive solution with minimal administration requirements.
“It’s worth a million bucks if you find the right products and markets.” How to reach: Brandes International, (440) 333-0754
