NEW YORK (
has earmarked $1 billion in loans for small and medium-sized businesses that are expanding in places like China, Brazil and Hong Kong.
As the pace of recovery remains sluggish in the U.S., more and more companies are looking to the global markets for growth. According to the
Small Business Administration
, small businesses contribute 34% of total U.S. export dollars and make up roughly 98% of all exporters.
The program is open to established businesses that have annual revenue between $3 million and $500 million, but may or may not have dipped their toes into the international markets. HSBC launched the 18-month loan program on Monday.
"This loan program provides vital financing and support to help U.S. small and medium size companies grow, especially as many businesses continue to be challenged by sluggish domestic growth and increased competition," Mark Luppi, HSBC's head of U.S. Business Banking, said in a press release. "Putting financing into the hands of small and medium sized businesses is critical as they make up more than 97% of all U.S. exporters."
"Based on the research we've done, 27% of small businesses are doing some sort of cross-border
transaction," HSBC's Luppi said in a follow-up interview. "We expect that to grow to 40% over the next 12 to 24 months."
Providing financing and assistance for international growth was something that was once only available to large businesses, but that's changing, particularly with President Obama's goal to double the amount of U.S. exports by 2015. The Small Business Administration has recently been promoting workshops and information to assist small businesses in their exporting needs. Lenders are increasingly reaching out to smaller businesses, especially as the opportunity for international growth in a variety of regions is strong.
According to The Export-Import Bank of the United States (Ex-Im Bank), an independent federal agency which helps finance exporting companies, said in 2012 it approved an all-time high of $35.8 billion in authorizations -- 17% of those authorizations were to small businesses (using the SBA's definition of a business with 500 or fewer employees).
The HSBC international loan program is part of a broader global effort by the bank to help small and medium-sized businesses develop and capitalize on international opportunities. HSBC also offers cash management services, trade services and foreign exchange services to small businesses. The company doesn't break out its small business lending figures, but Luppi said application volume has jumped 30% over the last year.
"We're looking for customers that are aligned to our target segment that are looking to go cross border," Luppi said, which includes businesses such as those providing hard goods, consulting or professional services that already have locations internationally or those that don't.
Luppi says while it isn't a requirement for a company to already have physical locations abroad, HSBC does want to see a "solid business plan" for expansion.
"We do want to really understand your plan," he said.
-- Written by Laurie Kulikowski in New York.
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