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Pennsylvania Small Business Is First to Benefit from Ex-Im Bank Medium-Term Delegated Authority Program


Media Contact Name/Phone: 

Marianna Ohe (202-565-3200)

WASHINGTON, D.C. -- A Pennsylvania small business has become the first U.S. exporter to benefit from a new initiative that delegates authority to lenders, enabling them to speed approval of Ex-Im Bank-guaranteed medium-term export loans.

F. L. Smithe Machine Co., Inc. of Duncansville, Penn., has won an order for printing machinery from a buyer in Mexico, sustaining U.S. jobs in the process, with financing facilitated under the new Ex-Im Bank (Export-Import Bank of the United States) Medium-term Delegated Authority program.

Ex-Im Bank provided a guarantee on a loan from NorthStar Trade Finance, Inc., Houston, Tex., to support the sale by the 175-employee company, which specializes in manufacturing printing presses and paper-converting and envelop-making machines.

Selling machinery requires much quicker turnaround because customers need answers right away, said Stuart Roberts, vice president at F. L. Smithe Machine Co. Ex-Im Bank delegated authority enabled NorthStar to provide quick decisions to our customers, which enabled us to secure a sale. Many times there's a lot of competition, and the vendor with the most competitive financing wins the order. Financing is critical, but so is the lead time associated with obtaining financing. This sale helps us keep jobs here in Pennsylvania.

During these challenging times small business exporters and their lenders can become more competitive by using this delegated authority program, said Kenneth M. Tinsley, Ex-Im Bank senior vice president, Credit and Risk Management. We're committed to helping more lenders qualify to offer their clients access to it.

Good economic news is a little scarce right now, so this great new Ex-Im Bank program is especially welcome. It should be particularly helpful for smaller companies that export capital goods, said James Morrison, president of the Small Business Exporters Association of the U.S.

NorthStar Trade Finance is one of three lenders approved by Ex-Im Bank last August to qualify for the new program, and the first one to use it. The bank specializes in providing trade finance services to small and medium-sized exporters. The other two approved lenders are Citibank, N.A., New York, N.Y.; and UPS Capital Business Credit, Windsor, Conn.

We're very pleased to be the first lender to use this innovative Ex-Im Bank program, said C. Scott M. Shepherd, president and CEO of NorthStar Trade Finance. F. L. Smithe is a great example of a small business gaining a competitive edge in the global marketplace through our partnership with Ex-Im Bank. Now we need to spread the word to exporters throughout the country about this program.

Under the Ex-Im Bank program, approved lenders can increase the use of Ex-Im Bank's medium-term guarantees supporting commercial loans for foreign buyers of U.S. capital goods such as machinery and equipment. The program is designed to significantly reduce transaction turnaround time and provide additional support for U.S. small-business exports.

Lenders approved for the program have delegated authority to underwrite and authorize Ex-Im Bank-guaranteed medium-term transactions without prior Ex-Im Bank review and approval. In each transaction, the lender will be required to share the credit risk by retaining 10 percent of the commercial risk but will also retain 10 percent of the Ex-Im Bank exposure fee. Transactions involving small-business exporters or small-business suppliers will be eligible for increased Ex-Im Bank risk coverage, and the lender's commercial-risk retention will be reduced to 8 percent. A lender may require the exporter to assume 50 percent of the lender's retention risk.

The participating lenders will have the thorough knowledge of Ex-Im Bank policies and credit standards necessary to expedite approvals and help U.S. exporters offer timely financing to their foreign customers.

Loans approved under the program may have repayment terms of two to five years. Transactions requiring a higher degree of specialized judgment, such as those involving complex financing, environmental or economic-impact analysis, may be excluded. Excluded transactions may be submitted for consideration under Ex-Im Bank's standard medium-term guarantee program.

Interested lenders may contact Tom Fitzpatrick, Trade Finance and Insurance senior relationship manager, at (202) 565-3642, or Charles Goohs, senior strategic initiatives officer, at (202) 565-3790. Detailed information on the MTDA program is available on the Internet at //www.exim.gov/.

Ex-Im Bank is the official export-credit agency of the United States. The independent, self-sustaining federal agency, now in its 75th year, helps create and maintain U.S. jobs by financing the sale of U.S. exports, primarily to emerging markets throughout the world, by providing loan guarantees, export-credit insurance and direct loans.

In fiscal year 2008 Ex-Im Bank authorized $3.2 billion - more than 23 percent of total authorizations - in direct support of U.S. small businesses as primary exporters. The Bank approved 2,328 transactions that were made available for the direct benefit of small-business exporters. These transactions represented 86 percent of the total number of authorizations approved.