SBA SOP 50 10 8.1, App19.B.7 — Export Working Capital Program (EWCP) Loans

SOP 50 10 8.1 App19.B.7

Effective 2026-10-01 · publisher's stamp for this provision

7. Export Working Capital Program (EWCP) Loans a. All General Requirements in this Appendix apply to EWCP Loans except as modified below. b. The Lender must obtain a first security interest in all collateral associated with the financed export transaction or transactions, including export-related inventory, receivables, credit insurance assignments, letters of credit proceeds, and contract proceeds, to the extent required by program rules. Collateral must be located in the United States, its territories or possessions. c. The Lender must manage the facility so that the loan remains in margin at all times under applicable EWCP borrowing base requirements, and SBA or a PLP-EWCP Lender may require additional collateral to maintain that position. d. When EWCP proceeds refinance debt, the collateral securing the debt being refinanced must be transferred to the EWCP loan. If EWCP is provided together with a term loan, the EWCP loan must have lien priority on the trading assets that secure the EWCP facility. e. Standby letter of credit structures under EWCP must comply with the collateral coverage, reserve, and liquidation requirements applicable to that program. In general, the export-related inventory produced, and the foreign accounts receivables generated by the business will be considered to provide adequate collateral coverage, and the Lender must take active steps to ensure that the loan always remains in margin. SBA considers a loan to be “In Margin” when the loan availability established per the EWCP formula is equal to or greater than the principal balance. SBA, for non-delegated loans, or the PLP-EWCP Lender for loans processed under delegated authority, 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. An EWCP loan may be issued at the same time as a term loan (conventional or SBA-guaranteed). When doing so, the EWCP loan must have lien priority on the trading assets securing and being used by the EWCP loan. The Lender must clearly identify the assets securing the EWCP loan in the credit memo. i. Standby Letters of Credit: Lenders are required to obtain and maintain sufficient collateral if an EWCP loan is used to support the issuance of a Standby Letter of Credit. Under a Transaction-Based loan, 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. a) Standby Letters of Credit can be issued to support either performance or financial needs of the Borrower, b) When issuing a financial standby letter of credit under an Asset-Based EWCP loan, the Lender must fully secure the obligation at 100% collateral against borrowing base availability. c) When issuing either a performance or financial standby letter of credit, the Lender must reserve 100% of the amount issued against the gross amount of the EWCP loan. This is to ensure that the facility has enough capacity to fund a draw on the letter of credit. d) Lenders using a cash deposit to satisfy the EWCP 25% collateral requirement for performance letters of credit may elect to reserve 75% of the issued letter of credit amount given the liquid nature of the deposit being held. e) In the event of a draw on the standby letter of credit, the Lender must liquidate the cash held on deposit or release the BBC collateral hold. ii. Receivables generated from sales to foreign purchasers are not considered a foreign asset and may be taken as collateral. iii. Personal guaranties of all 20% or more owners is generally required, but may be waived by the Director, International Trade Finance (D/ITF).

Source: SBA SOP 50 10 8.1, App19.B.7 — Export Working Capital Program (EWCP) Loans · source URL · snapshot 0fb0c4692cf52938