Trade Financings Resurgence
By Blanca Venegas
Small exporting companies in Florida are seeing a significant resurgence in commercial bank and non-bank trade financing as a result of their ability to sell their products throughout Latin America.
"Demand for US products in Latin America is great right now," said Steve Fancher, president and CEO of Florida Export Finance Corp., a non-profit corporation funded by the state to aid small exporters in Florida.
"These countries recovered faster than the US."
According to Mr. Fancher, smaller businesses in Latin America have also been stronger US product buyers than large companies as these countries’ economies continue to surge.
The biggest resurgence seen, he said, has been in the willingness of non-bank lenders to lend to small businesses in Florida.
"Florida export finance saw the lack of financing to small businesses in the state several years ago and we started cultivating the community of non-bank lenders," he said.
"That has caused the buyers overseas to have more faith in the small businesses here."
Because the interest rates for borrowing to fulfill foreign orders are "very good" at the moment, Mr. Fancher said, it will allow Florida small businesses to offer open account terms to the foreign buyer.
"That was not the case a few years back," he said. "Small businesses could not borrow anything from anywhere and were demanding payment in advance."
"That, of course, has a detrimental effect on buyers overseas because they don’t want to pay in advance and they will look elsewhere to buy," Mr. Fancher added.
Mr. Fancher said China is one of Florida’s largest competitors in selling into Latin America.
According to a report by Ernst & Young, the Asia-Pacific region is set to experience the fastest growth in global trade from now to 2020. Trade will also be "increasingly focused on Asia, the Middle East and Africa," the report says.
However, most Chinese products brought into Florida are re-shipped to Latin America through Miami and, as a result, the positive effect on Florida’s economy is minimal, Mr. Fancher said.
"I also see a number of companies setting up warehouses in Panama and other countries where Chinese products are brought in to them and shipped out from there," he said. "It does have a small beneficial effect on Florida because the owners are Floridians."
As for issues that will affect trade financing, Mr. Fancher said the federal fund sequestering will reduce trade because it affects imports and exports of goods in Florida.
"The regulations that have been imposed by the government are getting more difficult and costly to comply with, and it always has a negative effect on the inflow and outflow," Mr. Fancher said.
According to Florida Export Finance Corp., 64% of exports from Florida are attributed to small businesses.To read the entire issue of Miami Today online, subscribe to e-MIAMI TODAY, an exact digital replica of the printed edition.