First-person accounts from mortgage professionals

Luis G. Castillo, director, Global Trade and Financing

As published in Scotsman Guide's Residential Edition, November 2009.

Items manufactured around the world don't appear magically at your local store. In fact, they often require financing to get there.

That's where I come in.

The funding I arrange for international shipments — via export financing — helps deliver goods worldwide. The idea behind export financing is to fund shipments of great products that create wealth for those who make the goods and for those who buy and resell them.

My involvement in export financing has proven to be exciting and profitable. It's also allowed me to extend my reach beyond traditional mortgage-broker borders.

It started for me in 2000, when a business-owner asked if I could help finance a shipment from West Palm Beach, Fla., to the Dominican Republic. At the time, I focused on residential mortgages and had hardly a clue about how to fund such a deal.

Despite my inexperience, the idea of completing this loan intrigued me, and after a year I brought the client to the closing table. My take: $50,000. I was hooked.

Although I didn't need a special license to complete this deal, I did need a lot of self-education. During the year I worked on the transaction, I read many books and articles about international trade and global finance, and I compiled detailed lists of service-providers that work in the industry.

One of the things I learned during this time is that just about everything is shipped at some point. Equipment, machinery, consumables, parts, raw materials and agriculture products all traverse worldwide waterways. Each of those shipments requires money. Yet export financing remains unexplored by most finance professionals, leaving plenty of room for others to join.

But don't jump yet. Export financing requires deep due diligence and boatloads of patience. Brokers must research all aspects of a client's company and industry. They also must know about global supply-and-demand factors, accurately predict the success of various products in diverse markets, and establish new funding sources and referral networks.

The work, however, can deliver great rewards.

Many manufacturing companies in the U.S. and elsewhere could benefit from selling their products overseas. Since I started in the export-finance business almost 10 years ago, I have worked on deals involving Africa, Europe, North America, South America and the Caribbean.

Companies looking to export their goods should have strong balance sheets, solid profits and good cash flow. Interest rates are typically dictated by Libor, to which 2.25 percent to 3.5 percent is generally added. Many other factors come into play, including guarantee instruments, politics and relative risk based on each country's reputation.

By borrowing money to fund international shipments — clients often use their businesses as collateral — companies can reach international markets, increase profits and hire more employees. Their borrowing helps themselves and the global economy. Enabling them to find those funds also provides export-finance brokers as much as 3 points per deal.

Although there are plenty of other intricacies in export financing, the rewards for those willing to learn can be as vast as the open sea.

Luis G. Castillo is director of Global Trade and Financing, based in Miami. He can be reached at luiscastillo@globaltradeandfinancing.com, (305) 716-4054 or (305) 992-7283. For more information, visit Global Trade and Financing online at www.globaltradeandfinancing.com.