EXIM Bank EXIM Bank Trade Financing Solutions for Export Success!
Products: Risk Protection International sales are challenging enough without the added risk of not receiving payment for your goods or services. EXIM s export credit insurance provides payment coverage for both commercial and political risks. Moreover, your business can count on EXIM to protect your export sales to a single buyer or multiple buyers. Working Capital An EXIM guaranteed credit line may provide the vital funds you need to fulfill new orders. These funds may be used to purchase finished products, raw materials, and supplies as well as cover labor and overhead costs. This guaranteed credit line may even cover standby letters of credit used as performance bonds or bid bonds. Extend Credit to Buyers EXIM s export credit insurance enables your company to offer competitive open account terms instead of requiring your foreign buyers to pay cash-inadvance, use credit cards, or secure letters of credit. Furthermore, your insured foreign receivables may be assigned to a commercial lender, thereby increasing your company s borrowing base and accelerating its cash flow. Term Financing EXIM can provide your foreign buyers with term financing at competitive interest rates and longer repayment terms. Foreign buyers can use these funds to buy U.S.-made capital goods and services, helping your business go global.
How Our Products Support You Offer competitive credit terms to your foreign buyers Reduce your risk Obtain pre-export working capital loans to support the export of U.S. made goods and services
Eligibility Requirements Exporters must : be in business at least one year (unless otherwise noted), have financial statements or tax returns, have a DUNS number Exported Products / Services must be, for Short-Term products (Global Credit Express, Working capital and ST insurance) : 50-plus% U.S. content, including labor, excluding mark-up (cost basis) Exported Products / Services must be, for Medium-Term products ( MT Insurance and Guarantees) : 85-plus% U.S. content, including labor, excluding mark-up (cost basis) for full support of the transaction
Solution #1 :Working Capital Guarantee This is a guarantee to a commercial lender which makes a loan to an exporter to purchase or manufacture U.S. goods and services for export Loan proceeds may also be used to collateralize a standby-by letter of credit to be used as a performance bond (25% collateralization required)
Working Capital Guarantee Assists small and mid-size companies in obtaining working capital to produce or purchase US goods and services for export Provides a 90%guarantee of repayment (principal and interest) on loans to exporters May be set up as Transaction-Specific or a Revolving Line of Credit No minimum or maximum amounts Loan supports advances made against export-related inventory (including WIP) and foreign receivables: -Up to 75%advance rate on inventory, and up to 90%on foreign receivables
Working Capital Guarantee Asset-Based: fully collateralized Personal guarantees are required of owner(s) Cost: $100 application fee Up to 1.75% facility fee Reduced fee if: Exports sales structured under L/Cs and/or secured by export credit insurance; exporter s financial ratios are within its industry median A lower fee may be negotiated with a Delegated Authority Lender (see list on www.exim.gov) Interest rate is determined by the lender
Working Capital Guarantee
Solution 2: Global Credit Express: A Pilot Program A direct loan from EXIM Bank to an exporter for pre-export working capital Maximum loan amount $500,000 Tenor of 6 OR12 months To qualify: FICO SBSS score of at least 170 In business 3 years, exporting for 1 year EXIM Bank U.S. content requirements apply
Global Credit Express Product (Pilot Program for Small Business) EXIM Originator Benefits for Small Businesses: 1. Direct, fixed-rate financing with relatively low interest cost 2. Resources for export related expansion efforts, including marketing or sales related activities (up to $500,000) US Exporter Credit insurance policy (may be required) $ Payment US product and /or services export Foreign Buyer
Global Credit Express: A Pilot Program Process: Exporter must be referred to EXIM Bank by an originator in the GCE program Exporter completes short application; EXIM Bank runs company credit score; if met, full application is submitted to EXIM Bank FEES: Fees to originator (referral source), application fee, facility fee, legal fees, interest rate
Global Credit Express: A Pilot Program Benefits to exporter: Provides pre-export working capital Streamlined processing Quick turnaround on applications Fixed-rate financing No borrowing base or reporting requirements Option to renew at end of initial loan term
Trade Terms as a Spectrum of Risk Seller Risk High Trade Terms Open Account Buyer Risk Low Cash Against Documents and other Documentary Collections Usance / Deferred Letters of Credit Sight Letters of Credit Low Payment in Advance High
Solution 3: Export Credit Insurance Benefits: RISK PROTECTION: Protects US exporters against non-payment by foreign buyers due to Commercial Risks & Political Risks (see next slide) MARKETING TOOL: Allows exporters to offer competitive credit terms to foreign buyers Generally up to 180 days, some products may qualify for 360 day terms FINANCING AID: obtain additional financing Insured foreign receivables may be added to your borrowing base by assignment of policy proceeds (claim payments) to lender
Risks Covered Commercial Risks Insolvency Bankruptcy Protracted Default Political Risk Transfer Risk War, revolution, insurrection, expropriation Cancellation of an import or export license
Short Term Export Credit Insurance Coverage Parameters: Up to 180 days, exceptionally 1 year 95%, 98% or 100% coverage, depending on policy selected, products exported, and buyer classification Insures both commercial and political risks Lender Policies: Bank Letter of Credit Financial Institution Buyer Credit Financial Institution Supplier Credit Exporter Policies: Multi-Buyer or Single-Buyer
Short Term Export Credit Insurance Policies for Small Business*: Express Insurance -95 % cover, no deductible, pay-as-you-go, EXIM Bank obtains and reviews all credit info on buyers, maximum of 20 buyers Multi-Buyer -95 % cover, no deductible, pay-as-you-go, some buyer approval authority may be given to exporter Single-Buyer -90% cover, no deductible * SBA definition
Small Business Express Insurance: Key Features 95% coverage for non-payment due to commercial insolvency/bankruptcy/default) and political (war, revolution, transfer risk ) risks Insuring existing buyers is optional No deductible! No application fee! EXIM Bank pre-approves all credit limits requested and obtains credit information on your buyers at no additional cost to you 5 business day buyer approval turnaround on credit limits of $300,000 or less (longer turnaround on higher amounts) No minimum sales volume or premium pay only on the gross invoice value of whatyou ship, whenyou ship!
Small Business Express Insurance: Rates Rates are charged according to the length of the credit term you extend and the buyer type: for a sale to a private sector buyer on terms up to 60 days open account -$0.65 per $100. of the gross invoice value on a $25,000 sale, that s only $162.50 in premium! AND if you use insurance with a working capital guarantee from either EXIM Bank ORthe SBA, you get a 25% rate reduction on your premiums!
Small Business Multi-Buyer Policy Coverage: 95% commercial and 95% political Exporter must qualify as small business by SBA definition, and No more than $7.5 million in export creditsales over the past 2 years In same line of business for at least 3 years (No material adverse issues) Must insure ALLexport credit sales (L/C, CIA, CAD, SDDP, and Canadian sales may excluded) No deductible, no application fee, no advance premium required, pay-as-youship, no minimum premium requirement Buyer credit limits endorsed to policy (requires minimal pre-approvals by EXIM Bank)
Small Business Multi-Buyer Premium Rates on May 28, 2015 Term Sovereign Financial Institutions Private Sight L/Cs $0.03 $0.03 N/A 1-60 days $0.16 $0.20 $0.55 61-120 $0.27 $0.33 $0.90 121-180 $0.35 $0.43 $1.15 181-270 $0.43 $0.54 $1.45 271-360 $0.53 $0.65 $1.77 Per $100 of the gross invoice amount 25% rate reduction if used with EXIM Bank / SBA Working Capital Guarantee product!
Standard Business Multi-Buyer Policy For experienced exporters with more than 500 employees and /or $7.5mm in annual export credit sales Must insure ALLexport credit sales (L/C, CIA, CAD, SDDP and Canadian sales may be excluded) On a case-by-case basis, exporter may request to exclude certain countries and/or buyers ( Reasonable Spread of Risk ) Coverage: 95% for both commercial and political risks No minimum premium, pay-as-you-ship Buyer credit limits endorsed to policy (requires minimal pre-approvals by EXIM Bank)
Short-Term Single Buyer Insurance Policy Buyer-specific policy Insures a single sale or multiple sales toonebuyer 90%coverage, both commercial and political; 98%for bulk agricultural transactions 95%for letter of credit transaction Maximum policy period: 1 year No deductible, No application fee Premium based on country, type of buyer, and length of credit term extended (see rates on www.exim.gov) Charged on sales volume(not credit limit) Pay-After-You-Ship Premiums Reduced $500 minimum premium for small business exporters ($2500. minimum premium for non-small business)
Solutions 4 & 5: Medium-Term Financing Generally used for buyer financing of capital equipment: 85% financed, 15% cash down payment Repayment up to 5 years, exceptionally 7 years Amounts of $10 million or less Financing can be accomplished through the following EXIM Bank products: Lender guarantees Credit Insurance Direct Loans (few)
Just A Few Restrictions No Military or Defense-related products or obligors (exceptions apply) U.S. Content (ST: 50+%; MT: 85% U.S.) Restricted Countries (CLS) Economic Impact Shipping Additionality
Restricted Countries EXIM Bank conducts business in many countries throughout the world Restrictions may apply for political or economic conditions Check the Country Limitation Schedule (CLS) at www.exim.gov Xmeans support is not available.