SBA SOP 50 10 8, B.Ch4.B.5 — Credit Standards for EWCP
Verbatim text of SBA SOP 50 10 8 section B.Ch4.B.5 (Credit Standards for EWCP), effective 2025-06-01. 10 provision(s) quoted from the SOP PDF. SBA's own document page serves superseded editions, and the SOP is further amended by policy notices — read this with the notices that touch it.
Verbatim regulatory text
Verbatim provisions from SBA SOP 50 10 8, B.Ch4.B.5 — Credit Standards for EWCP — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
SOP 50 10 8 B.Ch4.B.5
5. Credit Standards for EWCP The policies that make up SBA’s credit standards begin with the requirements outlined in 13 CFR §§ 120.101 and 120.150. This section provides procedural guidance as to what the Lender should or must consider when analyzing any request for financial assistance that will be guaranteed by SBA. A Lender must analyze each application in a commercially reasonable manner, consistent with prudent lending standards. EWCP loans are self-liquidating loans, and the conversion of the export-related trading assets to cash is the primary source of repayment. Thus, if the Lender’s financial analysis demonstrates that the Applicant lacks reasonable assurance of repayment in a timely manner from the conversion of foreign sales into cash, the loan request must be declined, regardless of the collateral available or outside sources of repayment.
SOP 50 10 8 B.Ch4.B.5.a
a. Processing Methods Once submitted to SBA for non-delegated processing, an application withdrawn by a Lender, screened-out, or declined by SBA may not be approved by any Lender under its PLP-EWCP authority. E-Tran will not permit the submission of such an application under any Lender’s PLP-EWCP authority for a period of 12 months from the date of the withdrawal, screen-out, or decline of the application.
SOP 50 10 8 B.Ch4.B.5.i
i. Non-delegated – When a Lender submits an EWCP loan guaranty request under the non-delegated processing method, the Lender submits the application and supporting documents to SBA. SBA will make the final determination as to the eligibility and creditworthiness of the Applicant, including approving the uses of proceeds, the adequacy of the collateral being pledged, the structure of the loan and any equity injection to be required from the Applicant.
SOP 50 10 8 B.Ch4.B.5.i.ii
ii. Delegated – When a Lender submits an EWCP loan guaranty request under the Lender’s PLP-EWCP authority, the Agency does not review the Lender’s analysis of the credit or structure of the loan or line of credit prior to issuing a loan number. The Lender must analyze credit worthiness in accordance with SBA Loan Program Requirements and properly document its file. The PLP- EWCP Lender’s analysis is subject to SBA’s review and determination of adequacy when the Lender requests SBA to purchase its guaranty or when SBA is conducting lender oversight activities.
SOP 50 10 8 B.Ch4.B.5.b
b. Underwriting Lender must submit a credit memorandum with the application and analyze each EWCP request in a commercially reasonable manner, consistent with prudent lending standards. EWCP loans are self-liquidating loans and the conversion of the export-related trading assets to cash is the primary source of repayment. The Lender’s financial analysis should pay particular attention to the Applicant’s foreign payment terms and the impact on the Applicant’s cash cycle. Lender must specify whether the request is for a single transaction-specific loan, a transaction- based revolving line of credit (single or multiple transactions), or an asset-based loan.
SOP 50 10 8 B.Ch4.B.5.c
c. Credit Analysis Lender’s credit analysis must include the following: i. An explanation of the use of proceeds and benefits of the loan guaranty, including details of the underlying transaction(s) for which the loan is needed and the country(ies) where the buyer(s) is (are) located; ii. The factors demonstrating the Applicant does not have credit available elsewhere on reasonable commercial terms from non-Federal, non-State, non-local government sources, in accordance with Section A, Ch. 1, Para. H, Credit not available elsewhere; iii. A description of the nature of the business, length of time in business under current management and, if applicable, the depth of management experience in the industry or a related industry. Such analysis should include a brief description of the business’s management team; iv. A discussion of the Applicant’s export experience and export business plan, which may include the following: a) Dollar amount of revenues that are or will be generated by export sales, and the percentage of total revenue; b) Principal or proposed export markets; c) Proposed or established export customer relationships; d) Largest export sales contract to date; e) Export contract backlog discussion; and f) Documentation of the Applicant’s performance history and ability to successfully complete obligations required by standby letter(s) of credit, which serve as bid, advanced payment, performance, supplier, and warranty guarantees and/or bonds. v. A discussion of financing relationships to include a summary of all short and long term debt relationships, such as: a) Domestic revolving lines of credit or other term debt credit facilities, which includes a description of the purpose of the debt, payment structure and collateral; b) Standby debt. Address whether or not the standby debt will permit interest payments to be made and, if so, amounts and frequency, and under what conditions such payments can be halted; and c) Identify any SBA or other government-guaranteed financing. vi. A financial analysis of the Applicant’s historical and year-to-date- financial statements. The Lender should also provide an analysis of the Applicant’s financial projections. The analysis shall include: a) Analysis of historical cash flow and total debt service for the existing business; b) Calculation of operating cash flow (OCF) defined as earnings before interest, taxes, depreciation, and amortization (EBITDA); c) Analysis must document additions and subtractions to cash flow such as the following: i) Unfunded capital expenditures; ii) Non-recurring income; iii) Expenses and distributions; iv) Distributions for S-Corp taxes; v) Rent payments; vi) Owner’s Draw; and/or vii) Global cash flow analysis that includes assessment of impact on cash flow to/from any significant affiliate businesses.
SOP 50 10 8 B.Ch4.B.5.c.vii
vii. Debt service (DS) is defined as the future required principal and/or interest payments on all business debt inclusive of new SBA loan proceeds. viii. For projected cash flows, the Lender should provide the calculation of debt service coverage using the definitions above, and provide analysis of the assumptions supporting the projected cash flow, such as: a) Reason for reduced expense structure, b) Reason for revenue growth, i.e., new product lines, sales channels, and new production facilities; and c) Industry analysis. ix. A financial analysis of SBA EWCP loan repayment ability based on the Applicant’s cash cycle;
SOP 50 10 8 B.Ch4.B.5.x
x. Ratio calculations for the following financial ratio benchmarks: Current Ratio, Debt/Tangible Net Worth, Debt Service Coverage, inventory turnover, receivables turnover, and payables turnover and any other ratios the Lender considers significant for the business/industry; xi. An analysis of the collateral that may include a discussion of: a) Buyer(s) and export destination market(s) risk, which may include economic, political, compliance, currency, or logistics; b) Anticipated “terms of sale” on the exports to be financed through the EWCP loan. Terms of sale may include: i) Cash before Shipment/Cash at Shipment; ii) Irrevocable Letters of Credit iii) Export Credit Insurance (for comprehensive commercial and political risk); iv) Collections (Cash against Documents); and v) Open Account; c) Credit insurance experience; d) The composition and quality of the collateral in the proposed borrowing base that may include: i) Quality of the Borrower’s customer base; ii) The presence of concentrations risks; iii) Delinquency volumes and trends; and iv) Dilution. xii. A discussion of Lender’s credit experience with the Applicant and a review of business and personal credit reports. xiii. If the application involves a franchise (as defined by FTC), the Lender must review any credit information provided, such as the number of failed franchisees and cash flow projections provided by the franchisor). Lender must review any management agreement (unless the management agreement is part of the franchise disclosure documents for a brand listed on the Franchise Directory) to determine if it results in an ineligible passive company. d. Collateral See Section A, Ch. 5, Para. A. for guaranty requirements.
SOP 50 10 8 B.Ch4.B.5.i
i. EWCP loans must be secured by no less than a first security interest in all collateral associated with the transactions financed. This includes at least the export inventory and receivables, assignment of credit insurance, letters of credit proceeds, and contract proceeds as applicable. Collateral must be located in the United States, its territories, or possessions. An assignment of contract proceeds for an EWCP Asset Based Line of Credit may be required at the discretion of the LGPC for non-delegated loans, or the PLP-EWCP Lender for EWCP loans processed under delegated authority. In general, the export-related inventory produced and the foreign accounts receivables generated by the export sales financed will be considered to provide adequate collateral coverage. SBA, for non-delegated loans, or the PLP-EWCP Lender, may require additional collateral by requiring a lien on other business assets. When EWCP loan proceeds are used for debt refinancing, collateral for the loan being refinanced must be transferred to secure the EWCP loan.
SOP 50 10 8 B.Ch4.B.5.i.ii
ii. Standby Letters of Credit: SBA requires additional collateral if an EWCP loan is used to support the issuance of a standby letter of credit. In such situations, the Applicant must deposit cash into an account held by the Lender in an amount equal to at least 25% of the standby letter of credit being issued. This deposit must remain in the account held by the Lender for the term of the standby letter of credit. If using an asset-based loan (ABL) facility, SBA, for non-delegated loans, or the PLP-EWCP Lender may allow export inventory and/or foreign accounts receivable or other acceptable collateral to replace the cash deposit requirement. The Lender must determine that the borrowing base for the ABL will support at least 25% of the total of all standby letters of credit supported by the loan. All Lenders must document the method used to secure the additional collateral in their file. iii. Receivables generated from sales to foreign purchasers are not considered a foreign asset and may be taken as collateral. iv. Personal guaranties of all 20% or more owners is generally required, but may be waived by the Director, International Trade Finance (D/ITF).
Operationalizing SBA SOP 50 10 8, B.Ch4.B.5 — Credit Standards for EWCP
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