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EXPORT FINANCE

With the Export-Import Bank of the United States

David Josephson

Export-Import Bank of the United States

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Export-Import Bank of the United StatesWho We Are

• Official U.S. export credit agency

– Continuously operating since 1934

– Export efforts only since 1950s

• 2600+ U.S. exporting companies insured for foreign

receivables losses

• 97 Delegated Authority lenders in U.S.

• Dozens of U.S. and foreign banks insured/guaranteed

on loans/leases to foreign buyers

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• Our mission: U.S. jobs

• Role

– Take foreign risk on export transactions

– Support U.S. exporters with loan guarantees

– Guarantee loans to foreign buyers of US goods and

services

Export-Import Bank of the United StatesWhat We Do

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Total transactions: $25 billion (+50%)

Small businesses: $5.2 billion (+38%)

Approvals: 3,532; 88% small businesses

700+ first-time Ex-Im users

Export-Import Bank of the United StatesWhat We Did in 2010

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• Credit/guarantee authority legislated by US Congress

• Exporters and buyers need to be “arm’s length”

• Prohibited

– Exports of anything to military buyers

– Exports of munitions to anybody

– Adverse impact on U.S. economy

– Grants, subsidies

– Start-up risk, rescues

Export-Import Bank of the United StatesWhat We Can’t Do

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• Country restrictions

• 50% “US content” needed for short-term cover

• 15% cash down payment: Ex-Im medium-term cover

(amount of cover only on U.S. content)

Export-Import Bank of the United StatesWhat We Can’t Do

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• Export credit insurance (Exporters)

• Export working capital loan guarantees (Exporters,

banks/finance companies)

• Medium-term export credit insurance (Exporters, banks,

foreign buyers)

• Medium-term loan guarantees (Exporters, banks, foreign

buyers)

• Project finance/structured finance (Exporters, foreign

projects)

Export-Import Bank of the United StatesCredit & Finance Products

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• One-year policy, renewable

• Insures ALL export credit sales

• Coverage: 95% commercial and political

• Exporter: SBA-defined “small business”

– Export credit sales (average last 3-yrs) < $7.5 million

• Same line of business at least 3 years

• Refundable advance deposit: $500

• No deductible, no application fee, “pay-as-you-go”, no

minimum premium requirement

Export-Import Bank of the United StatesSmall Business Multi-Buyer Policy

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• Insures single sale or multiple sales to one buyer

• 90% coverage (commercial and political)

• Maximum policy period: 1 year, renewable

• No deductible, no application fee

• Premium based on country, type of buyer, length of

credit term extended (Rates: www.exim.gov)

– Charged on sales volume, not credit limit

– “Pay-After-You-Ship” premiums

– Minimum premium: $500 for SBEs; $2,500 other

Export-Import Bank of the United StatesSingle-Buyer Policy

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• 90% (principal & interest) on loans to exporters

• No limitations on loan amount

• Loan supports advances made against export-related

inventory and foreign A/Rs

– Up to 75% advance rate on inventory

– Up to 90% on foreign A/Rs

Export-Import Bank of the United StatesExporter Working Capital Guarantee (WCG)

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WCG Increases Borrowing Ability

Collateral Class Amount

Raw Materials $200,000 20% $40,000 75% $150,000

WIP 200,000 0% 0 75% 150,000

Finished Goods 600,000 50% 300,000 75% 450,000

Total Inventory $1,000,000 $340,000 $750,000

Open Account $400,000 0% $0 90% $360,000

Insured A/R 600,000 70% 420,000 90% 540,000

L/C Sales 300,000 70% 210,000 90% 270,000

Total A/R $1,300,000 $630,000 $1,170,000

Total Borrowing Base $2,300,000 $970,000 $1,920,000

Your Working Capital:

Without Ex-Im Bank With Ex-Im Bank

Advance

Rate

ABL

Collateral

Advance

Rate

WCGP

Collateral

vs

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• Contact Ex-Im regional office

• Exporter qualifications

– Minimum 3-year operating history

– At least 1-year exporting experience

• Buyer qualifications

– Minimum 3-year operating history

– Located in country where Ex-Im is open

– Must meet Ex-Im’s short-term credit standards

Export-Import Bank of the United StatesHow to Apply

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Placeholder: Globe/chain graphic

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OPEN DISCUSSION

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For today’s presentations:

www.lachamber.com/tabf