By Sharyn Koenig, Managing Director, EXIM, and Elizabeth Thomas, Director Sales and Marketing, EXIM
1. My foreign buyers want credit terms, but I require letters of credit or cash in advance. I don’t want to lose these sales. Can EXIM help? Letters of credit are secure payment terms, as the trade documents flow through commercial banks, which attach fees for the buyer and seller to process the documents and pay the exporter . Letters of credit may be “confirmed” by the exporter’s bank, taking the nonpayment risk away from the exporter . However, if the letter of credit is unconfirmed, the exporter has the risk of the buyer’s bank not paying, EXIM can insure that risk . Of course, another option would be to forego the letter of credit completely and offer open account credit terms, also insurable by EXIM .
2. I need money to help grow my export business. How can EXIM help me? EXIM’s Working Capital Loan Guarantee offers a guarantee to your lender so they will be more willing to lend you money to purchase or manufacture goods and services destined for export . The collateral for the loan is the inventory itself, including WIP (work in process), as well as the foreign receivables generated from the sale of the products . You must be able to demonstrate that you can service the debt you are taking on, and therefore your company’s financial statements will be reviewed and the owner’s personal guarantees are required . EXIM’s guarantee is 90 percent, so the lender may require you to separately collateralize the remaining 10 percent . The interest rate is negotiated between you and the lender .
3. My company provides a service, so we don’t have an actual “product.” Can EXIM help me? Of course! The requirement is the services be performed by U .S .-based personnel, either here in the United States or temporarily located in the host country . Progress billings must be in intervals no longer than 30 days, with payment terms allowed up to 180 days . Please note that we do not cover contract repudiation (cancellation of the contract) .
4. I have a very small business, with only eight employees. We have just started to export a U.S.-made product and our sales volume is only $75,000 a year right now. Am I too small for EXIM? Absolutely not! EXIM has special policies for small businesses which have been in business for at least 1 full year and have a Data Universal Numbering System number and financial statements or tax returns; the coverage is 95 percent for both commercial and political risks, with no deductible . You pay the premiums only on what you ship, when you ship . This pay-as-you-go feature means that there are no lost premium dollars, and you are only paying premium on the gross invoice value of your actual shipments . And . . . there is no minimum premium! To qualify as a small business, you must meet the definition set forth by the Small Business Administration (SBA) . In general, a manufacturer will qualify if the total number of employees in the company (including any parent, subsidiaries, and affiliates) is fewer than 500 or fewer than 100 if the company is a distributor or wholesaler . To qualify for our small business policies, you must meet the SBA definition and have export credit sales of less than $7 .5 million .
5. Does EXIM have any programs for veterans, women, and minority-owned businesses? EXIM has a business development team devoted to veterans, women, and minority-owned businesses, which markets exclusively to those sectors . They provide hands-on training to small, veteran, woman, and minority owned companies that wish to export . In addition, they collaborate with trade associations and other federal agencies that have a minority trade focus to help inform audiences about EXIM financing and create opportunities for export-ready businesses .
6. How long does it take to process an application with EXIM? Approval times will vary according to the product, dollar amount, and complexity of the transaction . EXIM OnLine is a Web-based application system that streamlines the short-term export credit insurance application and most applications for these products are approved within 10 working days . Working capital loan guarantee transactions