WHEN STEVE LAMOND LAUNCHED International Turbine Systems Inc. in 1992, he seemed to have all the key ingredients for a successful venture. His father, Jim, had the necessary technical expertise, as well as extensive knowledge of the northern Africa region the company would be tapping for business. The Warehouse Point, Connecticut, firm also had an interested client, a gas and oil production company that needed help overhauling and repairing equipment used in its Algerian oil fields. Business was booming after a time, but financing for Lamond's global enterprise was in scarce supply.

"The early projects were financed by a minimal cash infusion from the principals, but that only supported us for about a year and a half," Lamond, 44, recalls. "It became clear that for us to continue to develop and support the projects coming our way, we needed to do something else. I began to explore financing options. As is typically the case for small businesses, unless you've got a track record and a series of completed projects with good financial data, no bank wants to talk to you, especially if [you're] dealing internationally. We struggled for the second year trying to find someone who would work with us."

Factoring got International Turbine through the rough patch, after several banks shunned the $4 million company because it was either too small or didn't fit their profile of a viable export business. With traditional credit out of reach, Lamond found a lesser known financing source for companies doing business overseas: government-guaranteed loans. His search led to Export-Import Bank, which has a number of programs designed for small-business exporters, from insurance against default by foreign creditors to guaranteed working-capital loans.

With confirmed letters of credit from foreign buyers, International Turbine was able to borrow to develop spare parts. "Some contracts ran into the six-months to one-year delivery period," says Lamond. "The Ex-Im money was very important when I was building parts and product to ship."

Bank Culture Shock

Lamond's credit pursuit had a happier ending than many. While a global view of the economy has fueled export interest for even the smallest firms, financing small-business trade isn't a priority for many banks. Larger banks tend to specialize in bigger transactions because the fees and interest those loans generate are more significant. Small banks, meanwhile, are wary of international transactions.