FOREIGN FUNDING.

• Author: TITZE, MARIA
• Position: Brief Article

UTAH BANKERS MISERLY ON EXPORT FINANCING

A businessman in Moab is amazed and excited about the first few hits he gets from foreign countries on his new website. Denmark and Brazil -- wow!

Then he tries to fill his first big order. It's going to take 90 days, at least, and his overseas clients won't pay upfront. He'll need financing. He goes to his local bank, excited about his orders, but unsure just what to ask from his lending institution.

The first loan officer he meets is as new to export financing as he. "We don't do these kinds of loans, do we? How about we just use the line of credit you already have with us?" he says.

The businessman hesitates. How will he fill his domestic orders in the next 90 days?

Dollars on a Deadline

It's a scenario played out in loan offices all over the state, says Stan Rees, the director of the U.S. Department of Commerce's Salt Lake Export Assistance Center. Perhaps that's why Utah is doing about $4 billion in annual exports to foreign countries while California is doing close to $33 billion.

"Of course, we're not really comparable in size and population to California" Rees says. "But think about how many small businesses in Utah are driven by people who have been overseas, traveled places, and speak different languages."

Utah banks are bound to receive an increasing number of inquiries into export financing. Are they ready?

Banks unfamiliar with export financing will often look first to their standard loans. "They look for fixed assets to attach it to," Rees says.

On the other hand, banks familiar with export financing can look at a purchase order and a letter of credit and "see them as collateral almost," Rees says, "and approve the loan from there."

Few Fund Exports

Among Utah's 30 or so banks, only a half a dozen can do export financing, and most have to send such loans to a branch out of state. It's just not something Utah banks are familiar with, say industry observers, and unfortunately, they're losing good opportunities to out-of-state lending firms.

"I think Utah has some very good, viable small business exporters," says Dennis Chrisbaum, international trade finance manager for the U.S. Export Assistance Center in Denver. "But I don't think banks are particularly active in that regard, especially in smaller size transactions.

"I think part of the problem with the mergers of banks is they're now looking for larger transactions, larger deals," Chrisbaum says. "Large banks don't want to do anything...