CHICAGO The financial unit of package delivery company United Parcel Service Inc (UPS.N) said on Tuesday that it had launched a bridge loan for small U.S. businesses that import goods into the country.
Under the UPS Capital Cargo Finance program, the company will advance 50 percent of the value of goods to U.S. importers for up to 60 days upon pickup of the merchandise in a foreign country. The goods themselves will serve as collateral.
"Small businesses are often not the strongest part of the supply chain, and they typically have to pay up front for goods," said Chris Vukas, senior managing director at UPS Capital. "This caused cash flow problems for small companies."
Vukas said the new UPS Capital loan would be available to companies based on criteria such as profitability, a track record of at least three years in business, market share and company management.
UPS Capital hopes to introduce the program in Europe if it succeeds in the United States, Vukas said.
Credit is tight for small businesses in the United States.
According to a quarterly U.S. Federal Reserve survey of senior bank loan officers in August, 65 percent of respondents said they had tightened lending standards for companies with annual sales of less than $50 million, up from 52 percent in April and 30 percent in January.
"We see small business as the engine of growth that will drive the future of not only the United States but the whole world," UPS Capital's Vukas said. "This product will improve the cash cycle for these companies."
(Reporting by Nick Carey, editing by Lisa Von Ahn)