Increasing Your Export Sales

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Increasing Your Export Sales

• While Minimizing Risks!
• National Textile Association
• November 7, 2005

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Who We Are - What We Do

• Ex-Im Bank is an independent agency of the United
  States
• Established in 1934
• Headquartered in Washington, DC
• 5 regional business development offices (New
  York, Miami, Chicago, Houston, Long
  Beach, CA)
• Mission Support the export of
  US-manufactured products and services, and to
  create and sustain US jobs

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Your Needs - Our Solutions

• Inventory Financing

Working Capital Guarantee
2. Short-Term Accounts Receivable Financing
Working Capital Guarantee or Export Credit
Insurance
3. Medium-Term Financing
Export Credit Insurance or Guarantees
4. Long-Term Financing
Guarantees or Direct Loans
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Small Business IS Our Business

• 83 of transactions supported small business
  exports in FY04
• 82 working capital
• 91 short-term insurance
• 17 medium-term financing

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Ex-Im Bank Products
Post-Export Financing INSURANCE GUARANTEES
DIRECT LOANS
Pre-export Financing WORKING CAPITAL GUARANTEE

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Working Capital Guarantee
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Working Capital Guarantee

• Used by small-and medium-size U.S. companies
• Provides a guarantee to lenders which make loans
  to exporters funds must be used to manufacture
  or purchase US goods /services for export AND/OR
  to post performance bonds (stand-by L/Cs)
• No minimum or maximum amount, but the exporters
  financial statements must support the size of the
  loan requested

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Working Capital Guarantee

• 90 guarantee to the lender, 100 if woman or
  minority-owned
• Can be transaction-specific or revolving
• Inventory and accounts receivable (usually L/Cs
  or insured receivables) are pledged as collateral
• Advance rates as high as 75 on inventory and 90
  on eligible receivables
• Interest rate is negotiated between the exporter
  and lender Ex-Im Banks guarantee fee to the
  lender is up to 1.5 of the loan amount, and the
  bank may pass the fee on to the exporter

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Working Capital Guarantee

• Owner(s) with more than 20 equity must pledge a
  personal guarantee
• Additionality must be addressed by the lender
• No deep pockets
• Why is Ex-Im Bank needed to make this financing
  come to fruition?
• Ex-Im Bank delegated lenders can get the loan
  approved by their loan committee and attach Ex-Im
  Banks guarantee without prior approval

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WCG Increases Borrowing Power !
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Export Credit Insurance
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Export Credit Insurance Benefits

• Risk Protection Protects you against non-payment
  by your foreign buyers due to BOTH commercial and
  political reasons (see next slide)
• Marketing Tool Offer competitive credit terms
  directly to foreign buyers to meet/beat the
  competition and increase sales!
• Financing Aid Assign policy proceeds (claim
  payments) to a lender as additional collateral

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Export Credit Insurance

• BENEFITS
• Risk protection Insure foreign receivables
  against non-payment due to commercial and
  political risks
• Commercial risks Insolvency, bankruptcy,
  protracted default
• Political Risks War, revolution, insurrection,
  civil commotion, transfer risk

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Export Credit Insurance

• Risks Not Covered Disputes, unless and until
  they are resolved
• Cancellation of a sales contract
  Devaluation of a currency
  ( as a political risk )
  If a default
  occurs, and the buyer asserts that it was due to
  a government devaluation of the currency, we will
  view that as a commercial loss as opposed to a
  political loss.

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Just A Few Restrictions

• Military Exports (exceptions apply)
• Foreign Content
• Restricted Countries (political or economic)
• Economic Impact
• Buyers Creditworthiness
• (more on this later!)

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Military Restrictions

• No Defense Articles or Services
• Three Exceptions
• 1. Humanitarian purposes
• 2. Drug interdiction
• 3. Dual use items

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Eligible Countries

• Ex-Im Bank conducts business in many countries
  throughout the world
• Restrictions may apply for political or economic
  conditions
• 1st step, check the Country
• Limitation Schedule (CLS)
• at www.exim.gov
• X means support is
• not available.

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ST Export Credit InsuranceAll Multi-Buyer
Policies

• Except for specified exclusions, the exporter is
  required to include all export sales made on
  credit terms to all markets for which Ex-Im Bank
  provides coverage as listed in the current
  Country Limitation Schedule (CLS).
• The policy is issued for a period of one year and
  is renewable annually. The policy covers all
  eligible shipments made during the policy period.
• Coverage begins when the goods are placed en
  route to the buyer.

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Small Business Multi-Buyer Premium Rates
Per each 100 of invoiced amount
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Short-Term Multi-Buyer Export Credit Insurance
Discretionary Credit Limits

• Discretionary Credit Limits (DCLs)
  A DCL is a per-buyer limit which enables
  the exporter to extend credit terms, up to
  specified amounts, without prior Ex-Im Bank
  approval, provided that specified credit
  information is obtained prior to shipment which
  justifies the credit amount to be extended.
  The DCL may be superceded by a special
  condition on the CLS so check the CLS
  carefully!

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Short-Term Multi-Buyer Export Credit Insurance

• Discretionary Credit Limits (DCLs) amounts
  will be approved based on the exporters credit
  experience and credit procedures There are 2
  types of DCLs
• 1. Usually applicable to NEW buyers, the
  credit information DCL requires the exporter to
  obtain current (dated within 12 months),
  favorable credit information on the buyer before
  making shipment. This is generally a credit
  agency report and written trade
  references.

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Discretionary Credit Limits

• There are 2 types of DCLs 2.
  The ledger experience DCL allows the exporter
  to use prompt, favorable prior payment experience
  with the buyer as a basis for future shipments.
  Each of these three tests must be met
• 1. prompt payment 2. similar
  payment terms 3. similar
  amounts

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Higher Credit Limits

• For credit limits needed in excess of the
  DCLs , the exporter may apply for a Special
  Buyer Credit Limit (SBCL) on a particular buyer.
  Like the DCL, it is a revolving credit limit
  which will usually be issued for one year. The
  exporter applies for a renewal of this limit near
  the expiration date. Changes to an SBCL (e.g.,
  credit limit amount or payment terms) may be
  requested at any time.
• SBCLs supercede DCLs, but are still subject
  to the CLS!

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Short-Term Export Credit InsuranceShort-Term
Single-Buyer Policy

• Application Process
• Submit the application, showing details of the
  transaction with credit / financial information
  on the buyer (financial statements will be
  required on credit limits of 300,000 and above)
• If approved, Ex-Im Bank issues a formal
  commitment notice locking us in for 60 days
• To purchase the coverage as outlined, the
  exporter pays the full premium, up-front
• There is no application fee
• This is a GREAT marketing tool, as an exporter
  can quote a NEW buyer open account terms, making
  it subject to credit approval. The buyer will
  only know it is credit insured if told by the
  exporter, or if a claim is filed and Ex-Im Bank
  initiates collection efforts.

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Short-Term Policies Claims Information

• Claims may be filed no earlier than 90 days after
  the due date and no later than 240 days after the
  due date (thats between the 3rd and the 8th
  month after default).
• Ex-Im Bank must pay completely documented claims
  within 60 days.

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Medium Term Products
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Medium-Term Support

• Generally used for buyer financing of capital
  equipment
• 1 to 5 year repayment terms, exceptionally 7
  years and lt 10 million
• 15 downpayment required Ex-Im Bank supports
  100 of the remaining 85. Two MT products
  are available
• Guarantees - available only to a lender
  issuing the buyer credit
• Insurance - Medium-Term Single-Buyer Policy
  available to the exporter OR the lender

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Medium-Term Guarantees

• Available to lenders with an active Master
  Guarantee Agreement with Ex-Im Bank
• Lender loans money to a foreign buyer to
  purchase US goods/services
• The lender cashes out the exporter and creates
  a PN between it and the buyer
• The guarantee is in place to protect the lender
  against the buyers default
• Fees are a commitment fee of 1/8 th of ! ples
  the exposure fee as calculated on Ex-Im Banks
  fee calculator (www.exim.gov)

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Medium-Term Insurance

• Exporter OR lender extend credit terms to the
  buyer
• Ex-Im Bank insures the exporter against
  non-payment by the foreign buyer
• Fees are calculated using Ex-Im Banks exposure
  fee calculator on Ex-Im Banks website
  (www.exim.gov)
• Ex-Im Bank published Medium-Term Credit Standards
  for guidelines on evaluating a buyers
  creditworthiness. (www.exim.gov)

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Dealer Insurance Policy

• A policy available only to lenders, it insures
  short-term capital equipment and spare parts
  sales to one dealer on terms up to 180 days,
  which may be extended to another 180 days
• If the equipment is not sold at the 360th day,
  the credit may be rolled over to a medium-term
  tenor for an additional 2 years
• It is a single-dealer policy
• Some lenders may have minimum transaction dollar
  amounts

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Dealer Insurance Policy

• Strategic distribution channel for
• U.S. exports of equipment machinery
• U.S. exports of spare parts accessories
• Need combination of ST MT credit
• To acquire and hold capital goods as inventory
  for resale
• To support credit extended by dealer to its
  customers
• To purchase spare parts accessories
• To acquire rental fleets

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How To Access Our Products

• Banks
• Brokers
• City/State Partners
• Export Assistance Center (US
  Department of Commerce)
• Ex-Im Bank Regional Office

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How Can We Help YOU?

• Expand international sales
• Boost borrowing power
• Speed cash flow
• Enter new markets
• Mitigate risks and losses

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For More Information

• SHARYN H. KOENIG
• Senior Business Development Officer
• 212-809-2653
• E-MAIL sharyn.koenig_at_exim.gov