Lumber Exporter Relies On Ex-Im Bank To Maintain Necessary Line Of Credit
BCH Trading Co. - Hot Springs, Arkansas
Randy Barsalou likes to stress that the help he receives from the U.S. Export-Import Bank isn’t free.
“It’s not a gift,” said Mr. Barsalou, who co-owns BCH Trading Company with business partner Miles Coxe. He said the Hot Springs, Arkansas based company pays fees to the Ex-Im Bank to help cover any possible losses if a foreign company doesn’t pay.
Mr. Barsalou said he and others founded BCH Trading about 16 years ago by bringing together four different lumber exporters. While the company is still small, it has an outsized effect on the lumber-exporting industry.
BCH Trading operates by purchasing lumber from mills across the South, including Louisiana, Mississippi, Alabama, Georgia, North and South Carolina, Tennessee, Virginia, and Pennsylvania. BCH Trading then sells this lumber to international buyers in Western Europe, China, North Africa, and the Middle East.
Many of these mills are too small to export lumber to areas of the world where quality American woods are in high demand. Mr. Barsalou’s company is critical to the success of these small businesses, which employ workers across the region, as well as transportation and manufacturing jobs down the supply chain. “There’s a ripple effect to everything we do,” said Mr. Barsalou, who estimated that his company supports 60-70 jobs across his supply chain.
As an owner of a small company, Mr. Barsalou relies on the Ex-Im Bank to be able to receive the necessary financing to make his business successful. BCH Trading is one of the thousands of small and medium-sized businesses that depend on the Ex-Im Bank to grow and support local jobs.
BCH Trading uses the Ex-Im Bank’s working capital guarantee program to maintain a line of credit that commercial banks are not able to provide without Ex-Im backing.
Mr. Barsalou said that he doesn’t work directly with the Ex-Im Bank, but rather he works with his choice of commercial banks to maintain a line of credit that the Ex-Im Bank guarantees. This guarantee ensures that 90% of BCH Trading’s accounts receivable are covered, and that they can borrow against it to continue financing their operations.
Mr. Barsalou also emphasized the qualifications that BCH Trading is required to meet every year to ensure that his company can continue receiving Ex-Im financing. “We renew every year,” he said. “Just like any business they check personal credit, all of your assets. They’re on top of it.”
He said “If Ex-Im were to go away we wouldn’t have a line of credit, and we wouldn’t have enough financing to operate.” The lumber mills his company buys from would likely get hurt, too, he said.