Factoring 101

Ex-Im Bank Loans and Loan Guarantees

Ex-Im Bank Loans and Loan Guarantees

The EXIM’s products are intended to assist export sales for any American export company regardless of size. The bank’s charter provides that EXIM makes available “not less than 20%” of its lending authority to small businesses although they have often fallen short of the 20% threshold. 

Similar banks, known generally as export credit agencies (ECAs), are operated by 60 foreign countries. As the United States is a member of the Organisation for Economic Co-operation and Development (OECD) they conduct their activities by obeying OECD rules and principles. The goal is to permit exporters in various countries to compete on the basis of the quality of their goods and services, not on preferential financing terms. ECAs of countries, which are not participants of the OECD, such as the China Exim Bank, Ex-Im Bank of Russia, Brazil, and India, are not required by their governments to follow OECD rules.

Ex-Im Bank Loans and Loan Guarantees

Ex-Im Bank Working Capital Guarantees (For Exporters)

Ex-Im Bank’s working capital guarantees enable US exporters to obtain loans which facilitate the export of US goods and services.  Ex-Im Bank working capital loans are traditional loans made by commercial lenders, but backed by an implicit Ex-Im Bank guarantee.  They are designed to assist U.S business owners in fulfilling export sales orders, converting export related inventory and accounts receivable into cash,
and to make export financing generally more available.

To be eligible for Ex-Im Bank assistance, exporters must:

  • be located in the United States
  • have at least one year operating history
  • have a positive net worth

Additionally, export products or services must:

  • be shipped from the United States.
  • have at least 50% U.S. content. (if less than 50%, then Ex-Im Bank can only support the export up to the     percent of the U.S. content).
  • be provided by U.S.-based personnel if in the form of services. 

Use of Loan Proceeds

  • purchase finished products for export
  • pay for raw materials, equipment, supplies, labor, and overhead to produce goods and/or provides services for export
  • cover standby letters of credit, serving as bid bonds, performance bonds, or payment guarantees.
  • finance foreign receivables

Ex-Im Bank Commercial Loan Guarantees (For the Customers of Exporters)

Ex-Im Bank assists exporters through commercial loan guarantees to their creditworthy international buyers.  Utilizing the Ex-Im Bank guarantee program, international buyers working in both the public and private sector are able to obtain competitive term loans from banks when normal traditional financing would otherwise not be available.  Benefits include:

  • 100% coverage of commercial and political risk.
  • Flexible finance options and repayment terms.
  • No limits on the size of transactions.
  • Medium and long term financing available.
  • Allows international buyers to secure financing.

Ex-Im Bank’s Loan Guarantee Program is generally used to guarantee lender financing on purchases of U.S. capital goods and services including:

  • New capital equipment
  • Used and refurbished capital equipment
  • Software

It may also be used to absorb certain banking and legal fees and local costs and expenses.  Goods eligible for Ex-Im Bank Loan Guarantees must meet Ex-Im Banks domestic content restrictions.   Ex-Im Bank also requires a cash down payment equal to at least 15% of the U.S. supply contract be made by the foreign purchaser.

Ex-Im Bank Direct Loans

 In addition to providing loan guarantees upon loans made by traditional lenders, Ex-Im Bank also assists exporters by providing fixed-rate direct loans to creditworthy international customers.  Such direct loans are made available to purchasers of U.S. goods and services in both the private and public sectors.   Just as with guarantees, proceeds of Ex-Im Bank direct loans are used for

  • New capital equipment
  • Used and refurbished capital equipment
  • Software

There are no published minimum or maximum loan amounts regarding Ex-Im Bank direct loans although such loan transactions normally involve amounts of $10,000,000 or more.  As with the Ex-Im Bank Loan Guarantee Program, international buyers attempting to finance through the Direct Loan Program must apply a 15% down payment. 

The Export– Import Bank provides many other valuable services to small and mid-size business entrepreneurs and especially to those entering the export arena for the first time.  Exploring the Ex-Im Bank website at www.exim.gov can provide additional details on all Ex-Im Bank Programs.  

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