PESA hosted the Export-Import Bank of the United States (EXIM) on May 21 for a discussion of the tools and resources available to American companies. Eric Miller, Houston Regional Director, and Paula Swain, Managing Director – Global Energy, Project Finance Division, covered working capital, export credit insurance and foreign buyer credit.
Opening with an overview of the agency, Miller focused on EXIM’s mission of creating and sustaining American jobs by increasing U.S. export sales through finance products.
EXPORT CREDIT INSURANCE
Miller provided an overview of the agency’s export credit insurance, which allows companies that offer a service or product to a foreign buyer to insure payment sold on terms. EXIM protects that receivable and helps reduce overall risk.
EXIM assists companies by covering commercial and political risk. The agency’s coverage protects against insolvency, bankruptcy, and protracted default. EXIM also offers protection against currency transfer risk, war, revolution, insurrection, expropriation, or cancellation of an import license.
Miller discussed the four different types of policies and how EXIM prices small-business policies. To qualify as an eligible U.S. exporter, companies must have been in business for at least three years, have a DUNS number and tax returns, and export products that are 50% or more U.S content, including labor.
EXPORT WORKING CAPITAL
In another program, EXIM works with banks and acts as a guarantor on export working capital. Miller said there is no minimum or maximum, but amounts above $25 million for working capital go to the EXIM Board of Directors. Loan guarantee costs are paid by the exporter.
SUPPLY CHAIN FINANCE
EXIM works with banks to be a supply chain guarantor and provide a 90% guarantee of repayment on loans to exporters. By accelerating payment of accounts receivable, these vendors have increased liquidity for additional orders.
FOREIGN BUYER FINANCE
Swain took over from Miller to detail four foreign buyer credit programs: medium-term loan guarantee, long-term loan guarantee, long-term direct loan and letters of interest.
The differentiator between medium- and long-term loan guarantees is the amount (more or less than $25 million), length of time and who within EXIM has authority to execute. Swain said direct loans are not used often except in large project financings.
Swain described how the agency differentiates delegated authority between foreign credit and working capital when it comes to guaranteed lenders. When engaging in foreign buyer credit, EXIM does not delegate credit authority to guaranteed lenders. Rather, it has documentation that articulates what EXIM guarantees and the disbursement procedures guaranteed lenders must follow.
For medium- and long-term loan guarantees as well as direct loans, there is an exposure fee – a one-time charge based on the credit risk of borrowers. This fee can be calculated using an indicative exposure fee tool on EXIM’s website.
Swain encouraged attendees to request letters of interest from EXIM as an indication of support. These letters can give companies a competitive edge on their international competition. Swain said foreign export credit agencies, including various U.S. competitors, have similar letters as tools.
If you are interested in joining the International Trade Committee, please contact PESA Vice President Government Affairs Tim Tarpley. For additional questions about EXIM, please contact Eric Miller or Paula Swain. For more information, please visit www.exim.gov.LISTEN TO PRESENTATION