Support surfaces for businesses looking to export; outreach programs help match up buyers and sellers.

Local foreign trade experts say Los Angeles can't end its multibillion-dollar trade deficit unless small and mid-size exporters start using the tools already available to them within the region.

Tim Murphy, president of the Los Angeles-based Export Managers Association, said he has little patience with local firms that complain there is little support for the small to mid-sized firm that wants to sell to foreign buyers.

"If you want to export and can't do it in this town, you should get the hell out of business," Murphy said.

The 100-member staff at the Export Managers Association's Small Business Development Center can help businesses find buyers, show them how to structure export contracts and put them in touch with financiers and shipping companies, Murphy said. Community colleges and universities offer similar evening courses, he noted.

Businesses didn't automatically learn how to sell to foreign markets. They formerly relied on major trading companies and internationally oriented banks to connect them with foreign buyers. By 1986, when the California foreign trade deficit hit $38.68 billion, few firms knew how to gain access to overseas buyers.

Government agencies and industry trade groups started developing outreach programs in the mid-1980s. As a result, Los Angeles, California and U.S. companies have been able to help reduce the foreign trade shortfall in the past three years.

California exports increased 12.05 percent from $47.79 billion in 1988 to $53.55 billion in 1989. They rose another 9.12 percent from $53.55 billion in 1989 to $58.43 billion in 1990, according to data compiled by the Massachusetts Institute for Social and Economic Research of the University of Massachusetts at Amherst. The figures don't include all items shipped through California ports, only goods produced in California, said Foreign Trade Data Analyst Linda Downs.

The 1991 Los Angeles and California trade figures won't be available until May but unless Los Angeles firms do a better job of selling to foreign buyers, progress made in the past three years could quickly be erased.

The trade deficit of products shipped through the Port of Los Angeles -- the amount by which imports exceeded exports -- dropped from $24.18 billion in 1989 to $22.52 billion in 1990. However, the Port of Los Angeles figures included shipment of goods produced in other states.

Financing has been the major obstacle hampering Los Angeles firms in selling goods to foreign buyers, say exporters. But a series of export financing packages approved for small and mid-size businesses by federal and state agencies could help trim the deficit further in 1992.

Large firms with established banking relationships have no trouble financing their own exports. Their letters of credit with their banks -- a type of revolving loan with banks -- facilitates trade between nations, said Murphy of the Export Managers Association.

Small and mid-size exporters often don't have enough operating funds to buy or produce the goods, ship them and then wait to get paid. As a result, many of them can't sell California products to foreign buyers. But a variety of programs have been designed to help the smaller businesses sell their goods overseas, Murphy said.

A new program, Export Letter of Credit Facilitation Service started by the Small Business Administration, will help finance exports up to $50,000. But Tom Hodge, vice president of marketing for Long Beach-based World Trade Finance Inc., said there are many firms that need financing for exports between $50,000 and $500,000 and can't find export financing. The new program won't help them.

However, mid-sized exporters can take advantage of the Export Finance Division of the California World Trade Commission whereby the state guarantees a portion of each loan made by private firms. The financing program can be used by the California manufacturers that export their own goods and California customs brokers who help them deliver the products to foreign buyers.

State legislators will decide in the coming months if they will boost the size of the $7.58 million reserve fund for export loan guarantees and payment of loan defaults, according to state budget documents.

Working with the Washington D.C.-based Export Import Bank, and the export finance office of the California World Trade Commission, Hodge's group makes loans to California manufacturers that either make goods and export them or export firms that match up California producers with foreign buyers.

For example, a Los Angeles manufacturer may get an $800,000 order for machinery from a Korean buyer. The buyer will only give him a down payment and the exporter can't afford to wait three months for his money while the machinery is being shipped, Hodge said.

Export financiers analyze exporters' contracts, their credit and their buyers' credit. If they are convinced the buyer and seller are creditworthy, they buy the export contract, usually at a discount, Hodges said. At that point, the exporter is paid either from the export financier's own funds or from its line of credit at a bank. The export financier gets paid on his draft on the buyer's letter of credit when the goods are received and inspected, he said.

Forfaiting, another method of export financing, is used by large exporters. They find companies that have made multimillion-dollar sales in merchandise to a foreign government or company. However, the foreign buyer wants to pay for the order over two or three years.

After checking the buyer's credit and the political and economic conditions in the country where the product is to be shipped, the forfaiter buys the contract at a discount. For instance, if a foreign buyer wants the seller to carry back $2.5 million in debt on a $5 million sale for three years, the forfaiter looks at the amount of debt owed, the interest rate and buys the financing contract -- not the merchandise -- for less than the amount owed to the exporter.

Westdeutsche Landesbank's Dana Simons and Stewart Barrowcliff, forfeiting experts at the bank's Los Angeles office, have just finalized a major transaction in Mexico City. However, they were unwilling to divulge the identity of their clients.