Patton Electronics Company of Gaithersburg, Maryland, is a classic family-owned “Make It in America" start-up success story. The company was founded in 1984 in a basement by two brothers, Bobby and Burt Patton, with $5,000 each, while studying at the University of Maryland.
Patton makes modems, routers, and connectivity products for the telecommunications industry - basically the infrastructure for modern telecommunications systems. The company now has about a thousand products in its portfolio, and the biggest sellers are in voice-over-IP.
In the IT business, some of the largest buyers are foreign governments. For an outsider, it’s difficult to understand procurement rules and to know whether they are applied fairly, especially if you are not located in the country whose government is doing the purchasing. When orders from customers in other countries first became a considerable part of Patton Electronics’ business, its lender at the time would not provide a working capital line of credit for foreign transactions. “Domestic banks are going to be a little bit nervous about whether or not they’ll be able to collect on receivables that are coming from … countries they’re not familiar with,” President and CEO Bobby Patton said.
To fulfill its export orders and maintain cash flow, the company benefits from EXIM’s working capital lender loan guarantee since 2000 to grow its international sales. “EXIM provides some stability for the commercial banks in lending to organizations like mine,” Mr. Patton added. The guarantee provides funds to cover inventory, purchase materials, and to maintain cash flow while awaiting payments of foreign accounts receivable
EXIM’s support enables U.S. companies to access lender loans to purchase raw materials, supplies, labor, and related overhead, as well as cover standby letters of credit serving as bid or performance bonds. The line of credit unlocks cash flow to fulfill sales orders and take on new businesses abroad. With EXIM support, Patton Electronics is able to borrow more from its lender with the same collateral.
EXIM provides a 90 percent loan-backing guarantee to the lender, hence decreasing the lender’s repayment risk and increasing its willingness to extend a loan. EXIM’s pre-qualified commercial lender partners, working under EXIM’s delegated authority, can expedite the loan process by committing EXIM’s guarantee without prior approval
Today, Patton Electronics sells more than 2,000 products in over 120 countries around the world. It has about 200 employees and exports make up about 70 percent of their $30 million business. During the 2017 to 2019 period, EXIM has supported nearly $30 million of Patton's export sales.