An overview of post-export financing and how Ex-Im Bank can assist U.S. companies. This article is part of "A Basic Guide to Exporting", provided by the U.S. Commercial Service, to assist companies in exporting.
Last Published: 10/20/2016
Post-export Financing
Ex-Im Bank offers export credit insurance to offset the commercial and political risks that are sometimes associated with international trade. The insurance protects an exporter’s short-term credit extended for the sale of consumer goods, raw materials, commodities, spare parts, and other items on payment terms up to 180 days. Capital goods are eligible for up to 360 days. If the buyer fails to pay, Ex-Im Bank reimburses the exporter in accordance with the terms of the policy. Ex-Im Bank insurance is the largest federal program supporting short-term export credit.

Ex-Im Bank insurance policies for exporters include Multi-Buyer Credit Insurance, the Small Business policy, and the Single-Buyer policy. With prior written approval, an exporter can assign the rights to any proceeds from an Ex-Im Bank insurance policy to a lender as collateral for financing. Ex-Im Bank’s policies generally cover up to 95 percent of defaults caused by specified political risks and defaults arising from commercial risks. Ninety percent coverage is provided on short-term single-buyer policies. Exporters generally must meet U.S. content requirements and, under some policies, must insure all eligible foreign sales.

Several private companies also offer export credit insurance that covers political and commercial risks. Private insurance is available, often at competitive premium rates, to established exporters who have a proven history, although underwriting in particular markets may be limited.

Under separate programs, the bank buyer credit policy, Ex-Im Bank offers insurance or a guarantee to encourage banks and other lenders to make export loans to creditworthy foreign buyers of U.S. goods and services. Ex-Im Bank supports either medium-term financing (1 to 5 years for repayment after delivery or equipment installation) or long-term financing (up to 10 years for repayment) for heavy equipment and capital projects, such as power plants, telecommunications systems, and transport facilities and equipment.

As an alternative to guarantees, Ex-Im Bank also offers medium- and long-term loans. Ex-Im Bank loans are made on the same terms and conditions as guarantees, with the important difference that the bank sets the interest rate in accordance with international agreements. In many cases, an Ex-Im Bank guarantee results in a cost that is lower than an Ex-Im Bank loan.
 




Export Financing