As a US government agency, Ex-Im Bank does not have grants and cannot make loans to exporters. We can, however, offer a guarantee to your bank so they will be more willing to lend you money to purchase or manufacture US goods and services destined for export. The collateral for the loan is the inventory itself, including WIP, as well as the foreign receivables generated from the sale of the products. You must be able to demonstrate that you can service the debt you are taking on, and therefore your company financial statements will be reviewed and the owner's personal guarantees are required. Ex-Im Bank's guarantee is 90%, so the lender may require you to separately collateralize the remaining 10%. The interest rate is negotiated between you and the lender.
I have a sizeable export business going, and I have known my foreign distributors for many years. We give them open account terms and don't feel the need to insure them. Once in a while, however, they need a shipment which would put them over their intern
You can use Ex-Im Bank's single-buyer export credit insurance policy. This covers single or multiple shipments to one buyer, for a specific dollar amount and during a specific period of time (12 month maximum) which you specify. The coverage is 90% for both commercial and political risks to a private buyer (95% for letters of credit) with no deductible. And the insurance premiums are published on www.exim.gov, so you can quote pricing to the buyer as soon as the order arrives and build the insurance cost into your invoice.
I feel that my buyers are creditworthy, but I am concerned about the political climate in some of the countries. What can I do to mitigate these risks?
Ex-Im Bank offers a political-only export credit insurance policy, which protects you at 95% for specified political risks. Sovereign buyers (those which have the Central Bank or Ministry of Finance guarantee) are covered at 100%. Remember though, that valid claims will require that the buyer make the local currency deposit within 3 months after the due date.
I sell to my subsidiary in another country and I am concerned that they will not be able to get hard currency out of the country. How can Ex-Im Bank help me?
Sales to subsidiaries and affiliates are eligible for Ex-Im Bank's political-only export credit insurance policies, with coverage at 95%. One of the risks we cover is the inability of the Central Bank to convert to buyer's local currency into US dollars. Remember though, that valid claims will require that your subsidiary make the local currency deposit within 3 months after the due date.
Both involve transactions that are less than $10 million and have repayment terms of five years or less. Medium-term insurance can generally be obtained faster, since a policy is issued instead of a guarantee. If necessary, a claim will be paid if all the conditions to the policy have been met. The guarantee is an unconditional promise to pay the lender in case of buyer default so it typically takes longer to process.
My foreign buyer is requiring that I open a stand-by letter of credit for 10% of the contract price as a performance bond. That's a sizeable amount of cash for me to set-aside. Is there anything Ex-Im Bank can do to help me?
Yes! We can help you arrange a loan from your commercial bank to collateralize the letter of credit. When the bank uses Ex-Im Bank's Working Capital Guarantee, you need only collateralize the loan at 25% of the face value of the stand-by letter of credit! So if your buyer wants you to open a letter of credit for $100,000, you need only collateralize it with a $25,000 on the $100,000 loan from the bank. Remember though, that this will be carried on your balance sheet.
I sell US-made capital equipment and my foreign buyers want several years to pay for it. I cannot afford the carry the receivable for this long. What can I do? If my bank is talking about financing my foreign buyers for me through Ex-Im Bank, what does t
Many commercial banks which partner with Ex-Im Bank are willing to finance the buyer for you. The Ex-Im Bank regional office near you can tell you if your own lender is one of these banks. If not, they can help you locate a lender for your deal. Generally, the bank will do a credit check on the buyer to make sure they are creditworthy for the amount of the sale. The bank cashes you out and creates a promissory note between themselves and your buyer, under which the buyer pays the bank over the course of a few months or a few years (depending on the product and the dollar amount of the transaction). The commercial bank is willing and able to do this only because Ex-Im Bank is protecting them against non-payment by your buyer! And the cost to you is - zero! The foreign buyer is technically taking out a loan from the commercial bank and so the buyer - not you - pays the principal, interest and any other fees to the lender.