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The White House calls for a doubling of exports by 2012
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Energy News (Links)
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The Export Import Bank of the United States (Ex-Im
Bank) is mandated to assist small and medium businesses. Having
said this, the definition of a small business is 500 employees.
Ex-Im is involved in transactions as small as a few thousand dollars
and as large as a few billion dollars. From smallest to largest,
here is what you can expect from the Ex-Im Bank.
1. Insuring Receivables.
Even the smallest business can qualify. For a fee of $500, Ex-Im
will set your business up with insurance on everything you sell.
Drawbacks? There is a fee of about 1/2% on everything the business
exports, there may be a deductible and if the rules are broken the
insurance in void.
2. Insured Line of Credit.
The Ex-Im receivable insurance is combined with a bank line of
credit. Each customer has to be approved and is assigned a credit
limit. Your company must make sure payments are received on a
timely basis and any late accounts are reported to the bank. About
80% of funds are released when goods are shipped.
3. Working Capital Loan.
This is Exactly the same as the Insured Line of Credit except the
bank releases about 70% of funds when the approved Purchase Order is
received instead of the invoice and bill of lading.
4. Floor Plan.
Another extension of the Insured Line of Credit, this option extends
the invoice payable period up to a maximum 365 days, allowing the
dealer to floor plan merchandise.
5. Equipment Financing.
A loan guarantee is obtained based on the customer's credit and
ability to pay. A bank then lends against the Ex-Im (U.S.
Government) guarantee. The maximum transaction is $5,000,000 ($5
million). The borrower, based on his credit will be able to borrow
between 85% and 100% of the purchase price.
6. Project Finance.
Starting at $10 million and sometimes exceeding $1 billion, a
project finance guarantee is issued by Ex-Im. The borrower can then
use the U.S. Government guarantee to collateralize a loan. U.S. and
foreign banks are enthusiastic bidders for government insured
loans.
Ex-Im Bank supports financing for capital goods and services
enabling U.S. exporters or lenders to offer extended credit terms to
their international customers, including repayment terms of up to 15
years for financed amounts of $10 million or more. The length of the
repayment term Ex-Im Bank supports depends on the dollar size of the
transaction, the useful life of the items, and the country of the
buyer.
Features
* A 15% cash payment is required from the international buyer
* Ex-Im Bank covers 100% of the 85% financed portion in the event of
a commercial or political payment default
* The interest rate is typically a floating market rate of interest.
Fixed-rate financing is also available
* To access medium-term financing, Ex-Im Bank charges a one time
fee.
* Financing in Euros, Rand, or other hard currencies may be
supported.
Medium-Term Leasing
Ex-Im Bank supports competitive medium-term finance leases. Support
of finance leases is important since some foreign buyers of U.S.
capital goods prefer lease financing as an alternative to
traditional installment loan financing. Ex-Im Bank will guarantee
lease financing of U.S. goods and services to creditworthy
international lessees, when financing is otherwise not available.
Long-Term Financing
Ex-Im Bank also supports long-term financing for transactions or
projects that are over $10 million. Repayment terms are typically up
to 10 years, but can be up to 12 years for large civil aircraft and
non-nuclear power plants and sometimes 15 years for nuclear power
plants and certain renewable energy and water sector exports.
Loan Guarantee Competitive Financing for International
Buyers
Ex-Im Bank assists exporters by guaranteeing term financing to
creditworthy international buyers, both private and public sector,
for purchases of U.S. goods and services. With Ex-Im Bank’s loan
guarantee, international buyers are able to obtain competitive term
financing from lenders when financing is otherwise not available or
there are no economically viable interest rates on terms over
one-to-two years. Benefits:
1. Enables international buyers to obtain loans from lenders
2. Covers 100% of commercial and political risks
3. Flexible financing options and repayment terms
4. No limits on transaction size
5. Medium-term and long-term financing available
Eligibility
Ex-Im Bank’s guarantee of a lender’s loan to an international buyer
is generally used for financing purchases of U.S. capital equipment
and services. Financing may also be available for: Refurbished
equipment Software Certain banking and legal fees (See Financing
Fees for Ancillary Services.) Certain local costs and expenses (See
Ex-Im Bank Policies – Local Cost.) Military or defense items are
generally not eligible nor are sales to military buyers (with
certain exceptions). Goods eligible for Ex-Im Bank financing must
meet Ex-Im Bank’s foreign content requirements (See Ex-Im Bank
Policies – Foreign Content.) Goods
eligible for Ex-Im Bank financing must be shipped from the United
States to an international buyer. U.S. flag vessel requirements must
be complied with in connection with any guarantee transaction that
is (i) over $20 million (excluding Ex-Im Bank Exposure Fee) and/or
(ii) with repayment terms in excess of either (A) 7 years or (B) the
term permitted under Ex-Im Bank's agreement.
Availability:
Ex-Im Bank can do business in most markets. However, Ex-Im may be
limited or unable to offer financing in certain countries and under
certain terms. (See Country Information –
Country Limitation Schedule.)
Economic and Environmental Impact:
Prior to approving certain transactions, Ex-Im Bank will take into
account the economic impact of a particular transaction (see Ex-Im
Bank policies – Economic Impact) and the environmental effects (see
Ex-Im Bank policies – Environment).
Product Description Size:
There is no minimum or maximum limit to the size of the export sale
that may be financed with Ex-Im Bank’s loan guarantee.
Coverage:
Ex-Im Bank’s loan guarantee covers 100% of qualifying principal and
accrued interest on any amount. (We also offer a medium-term
insurance policy that can support financings up to $10 million.) The
total level of Ex-Im Bank qualifying support will be the lesser of
85% of the value of all eligible goods and services in the U.S.
supply contract or 100% of the U.S. content in all eligible goods
and services in the U.S. supply contract.
Cash Payment:
Ex-Im Bank requires the buyer to make cash payment to the exporter
equal to at least 15% of the U.S. supply contract. The 15% cash
payment can either be borrowed from a lender or the exporter at
market terms, or be from the buyer’s own funds.
Repayment Terms:
Generally, the repayment term of a transaction is determined by
numerous variables including but not limited to the borrower’s
financial condition, the common repayment terms the market gives
such products, specific industry practices, industry and country
conditions, useful life, OECD and Berne Union agreements, and the
matching of terms offered by other foreign government-sponsored
financing. Repayment terms up to five years are generally available
for exports of capital equipment and services. Terms up to 10 years
may be available for transportation equipment and exports to
large-scale projects.
Medium-Term Credit Standards:
To qualify for Ex-Im Bank’s medium-term financing, borrowers must
meet certain credit standards, depending on the size of the
transaction, the nature of the buyer, and the goods and services
being financed. If a buyer does not meet these standards, the use of
guarantors and other credit enhancements may be used to qualify.
(See Medium-Term Credit Standards.)
Application Final Commitment (AP):
If the contract has been awarded, either the lender or the
international borrower may submit the loan guarantee application.
Commercial lenders are often more familiar with the application
process, which generally expedites their transactions. If the
contract has been awarded and there is a lender ready to finance the
transaction with Ex-Im Bank’s support, a final commitment (AP)
application may be submitted.
Letter of Interest (LI):
If the contract has not been awarded, then a lender, an exporter or
an international borrower may request a nonbinding letter of
interest (LI) containing Ex-Im Bank terms for the specific
transaction. The LI is processed within seven working days, is valid
for six months, and can be renewed.
Preliminary Commitment (PC):
In exceptional cases, Ex-Im Bank will accept an application for a
preliminary commitment (PC). A PC is a nonbinding expression of
interest from Ex-Im Bank that the borrower's needs, as outlined in
the application, generally meet Ex-Im Bank’s financing requirements.
Fees
Letter of Interest Application Processing Fee – $100 Preliminary
Commitment Application Processing Fee – 0.1 of 1% of the financed
amount Commitment Fee – 0.125% per annum on the undisbursed balance
of the loan Facility Fee — one-sixteenth of one percent per annum is
charged on the total financed portion of the credit guarantee
facility in lieu of a commitment fee. Ex-Im Bank Exposure Fee –
Varies, depending upon tenor, country risk, and buyer credit risk. |
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