This article has been written by my Law Clerk,
Pace Law School student, Sharonda Davenport.
A company exporting goods and services internationally can face many obstacles during the process. These transactions are often risky and may involve making important financial decisions. Companies often opt to take out loans from private lenders, to supplement the cost of materials, or allow foreign companies to make delayed payments upon receipt or sale of the exported goods. It can often take years for a foreign investor to pay a US company in full for their exports. Luckily, Export-Import Bank of the United States (EXIM Bank) is here to assist companies participating in certain foreign transactions, in an effort to promote US international exportation.
EXIM Bank supports a variety of industries that fall under many umbrellas, such as:
· Manufacturing, services (for US exports if performed by US personnel)
· construction equipment
· renewable energy
· medical equipment
· agricultural business
· wholesale retail (from small to mid sized companies)
· power generation
· oil and gas
· and aircrafts and avionics.
EXIM Bank covers both pre- and post exportation financing. For a company’s pre-exportation needs, EXIM has a working capital guarantee, which connects companies to private lenders with an assurance that EXIM will pay the lender in full for the loan or credit amount that a company will borrow, if for some reason a company cannot pay the bank back in a timely fashion. As part of their post- exportation financing, EXIM provides a risk protection extension of credit for US companies, in both single and multi-shipment transactions, that is meant to protect assets in their accounts receivable while awaiting payment from a buyer.
Restriction in EXIM Services
Of course, with this generous aid comes certain restrictions of service. EXIM does not finance any military or defense related products. Although there are few exceptions to this rule, these items must go through further inquiry which may involve going through other government institutions, such as the Department of Defense, to gain approval. There are also limitations on the amount of content that can be financed. EXIM will finance the US portion of exports, but will not take responsibility for any foreign owned portions of a product. They also will not support transactions that have an adverse effect on the US economy, although there are some exceptions that would be subject to rigorous scrutiny. In regard to US shipments, any shipment above $20 million dollars must be transported on a US registered vessel. Lastly, EXIM will not re-finance any transactions that have already been financed by another banking entity.
Requesting EXIM Assistance
So, when does one call EXIM for assistance? When a company exports goods, their accounts receivable are often left unprotected. This means a foreign entity receiving the US export may have formed an agreement with the US company in which the Foreign company does not have to make an immediate payment for the exports received. Although this might sound like a large risk, EXIM exists to promote International export of US goods and services. No company should miss out on an opportunity to trade with other countries out of fear of losing capital.
Qualifying for EXIM Assistance
In order to use EXIM services a company must have at least 3 years of exporting experience, written references from commercial banks, and/or international companies that the borrower has dealt with in the past, and undergo a credit check. Remember, this is not simple aid being provided. It is actual credit insurance and working capital.
There are 12 export help centers around the united states which one can go to and consult directly with an EXIM representative. To reach the care center hotline, interested parties can call 800.565.3946 Monday through Friday during normal business hours (8am-5pm), except holidays, or visit the website www.exim.gov to for more information. The website provides a free resource that connects companies to brokers that will assist in that companies day to day export/import needs. A full list of brokers is also provided on the website above.