Ex-Im BankU.S. Ex-Im Bank
Ex-Im Bank’s insurance and loan guarantees are structured to encourage exporters and financial institutions to support U.S. exports by reducing the commercial risks (such as buyer insolvency and failure to pay) and political risks (such as war and currency in convertibility) of international trade that could result in nonpayment to U.S. exporters by foreign buyers of their goods and services. The financing made available under Ex-Im Bank’s guarantees and insurance is on market terms, and most of the commercial and political risks are borne by Ex-Im Bank.
Ex-Im Bank’s loan program is designed to neutralize interest rate subsidies offered by foreign governments. Because the bank responds with loan assistance, U.S. financing can be competitive with that offered by foreign exporters.
Ex-Im Bank’s programs help to reduce your risk, level the playing field, and make U.S.companies more competitive in the international marketplace.
Preexport FinancingThe working capital guarantee enables lenders to provide the financing that an exporter needs to purchase or produce a product for export, as well as to finance short-term accounts receivable. If the exporter defaults on a loan guaranteed under this program, Ex-Im Bank reimburses the lender
for the guaranteed portion—generally, 90 percent of the loan— thereby reducing the lender’s overall risk. For qualified loans to minority, woman-owned, or rural businesses, Ex-Im Bank can increase its guarantee coverage to 100 percent. The working capital guarantee can be used either
to support ongoing export sales or to meet a temporary need for cash arising from a single export transaction.
The working capital guarantee offers generous advance rates, so that exporters can increase their borrowing capacity. Those rates apply in:
- Inventory—up to 75 percent advance rate (including work-in-process, i.e., material that has been released to manufacturing, engineering, design, or other services)
- Foreign accounts receivable—up to 90 percent advance rate. Guaranteed working capital loans are secured by export-related accounts receivable and inventory (including work-in-process) tied to an export order. (For letters of credit issued under a guaranteed loan, Ex-Im Bank requires collateral for only 25 percent of the value of the letter of credit.)
Postexport FinancingEx-Im Bank offers export credit insurance to offset the commercial and political risks that are sometimes associated with international trade. Under the majority of policies, the insurance protects an exporter’s short-term credit extended for the sale of consumer goods, raw materials, commodities, spare parts, and other items for which payment is expected within 180 days. If the buyer fails to pay, Ex-Im Bank reimburses the exporter in accordance with the terms of the policy. The majority of payment terms are up to 180 days, with some transactions qualifying for terms up to 360 days. Ex-Im Bank insurance is the largest federal program supporting short-term export credit.
Ex-Im Bank insurance policies for exporters include the Small Business policy, the Single-Buyer policy, and the Multi-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 100 percent of defaults caused by specified political risks, such as war and expropriation, and up to 98 percent of defaults arising from commercial risks, such as buyer default and insolvency. 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 a separate program, the Bank Buyer Credit Policy, Ex-Im Bank offers 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’s guarantee supports either medium-term financing (1–5 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 an important difference: namely, 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 that of an Ex-Im Bank loan. For more information on Ex-Im Bank’s programs, visit http://exim.govor contact your local U.S. Commercial Service office.