Export-Import Bank of the United States
Originally published: September 2013
79 Years Helping Small and Medium-Sized Businesses Succeed in the Global Marketplace
The recent global economic meltdown underscored the reality that, today, economies are interdependent. When one begins to fail, others follow. Yet, isolating your company from the rest of the world doesn’t help. In fact, most economies can no longer count on domestic markets alone to keep them healthy or help them grow. They need to encourage and assist their local businesses to trade across borders. For companies to grow and create jobs locally, they must be able to reach customers globally.
If your company hasn’t yet ventured into foreign markets, there’s a U.S. government agency that provides financial services that can help you find success as an exporter, the Export-Import Bank of the United States.
Ex-Im Bank: Helping U.S. Exporters Succeed
Ex-Im Bank helps U.S companies maximize their export opportunites by taking on the credit and country risks that the private sector cannot. By working to match the financing that other goverments provide to their exporters, the Ex-Im Bank helps level the playing field for exporters of U.S. goods.
Ex-Im Bank is an independent government agency providing export assistance to primarily small and medium-sized U.S. enterprises (SMEs). It was established in 1934 as part of President Franklin Delano Roosevelt’s New Deal initiative, in support of his foreign policy vision. It does not compete with U.S. banks or insurance companies, but fills in the gaps in private export financing and export credit insurance.
In FY 2012, under the leadership of the current Chairman and President, Fred P. Hochberg, the Ex-Im Bank:
- worked with more than 3,400 U.S. companies;
- exceeded $38.5 billion in financing authorizations; and
- supported close to $50 billion in exports and 255,000 jobs.
How Ex-Im Bank Supports U.S. Exporters
- Export Credit Insurance provides payment coverage for both commercial and political risk. This enables the exporter to sell on “open account” terms to international buyers, rather than requiring cash in advance or expensive, complicated letters of credit. The insured foreign receivables can be used to increase the exporter’s credit lines, thereby accelerating their cash flow.
- Working Capital Guarantees allow exporters to obtain working capital loans of which Ex-Im Bank guarantees 90%. Ex-Im Bank’s Delegated Authority Lenders evaluate eligibility against Ex-Im Bank’s requirements and expedite the loan process. Foreign companies producing goods or services that are ultimately exported by U.S. companies can also obtain working capital loans guaranteed by the Export-Import Bank.
- Medium and Long-Term Loan Guarantees help exporters secure competitive, term financing for their international buyers.
- Finance Lease Guarantees help exporters secure competitive financing for international buyers that prefer lease financing to installment loans.
- Supply Chain Finance Guarantees, offered to lenders (banks, finance companies, etc.), support U.S. exporters and their suppliers utilizing accounts receivable financing. These guarantees are designed to inject liquidity and provide suppliers, particularly small businesses, quicker access to capital at a lower cost.
Ex-Im Bank’s Support for Small Business
The program’s small business products are designed for companies that meet the Small Business Administration’s definition of a small business. To be eligible, the goods or services must be produced with more than 50% U.S. parts and labor.
Ex-Im Bank also has a business development team devoted exclusively to small and woman and minority-owned business enterprises.
On average, more than 85% of Ex-Im Bank’s transactions directly benefit U.S. small businesses.
Other Government Departments Providing Support to Small Business Exporters
- Overseas Private Investment Corporation (OPIC)
- U.S. Department of Commerce
- U.S. Small Business Administration
- United States Trade and Development Agency (USTDA)
Facts about the Export-Import Bank
- In FY2012, the Bank authorized $35.8 billion to support nearly $50 billion in U.S. exports resulting in approximately 255,000 jobs.
- Ex-Im Bank operates in accordance with the terms and conditions of the Organisation for Economic Co-operation and Development (OECD) Arrangement on Officially Supported Export Credits. The Arrangement is intended to provide a level playing field so that OECD exporters compete on the price and quality of their goods and services, not on the financing terms.
- Ex-Im Bank is self-sustaining, operating at no cost to U.S. taxpayers. In the first half of FY 2012, the Bank earned interest and fees of $548 million compared to $18 million paid in claims.
- In the last 5 years the Bank has earned $1.6 billion above the cost of its operations.
- The Export-Import Bank of the United States has been twice awarded “Best Global Export Credit Agency (ECA)” and four times consecutively named “Best ECA in the Americas” by Trade Finance magazine, a global publication concentrating exclusively on the international trade finance market.
- Ex-Im Bank was also recognized as the World’s “Best Export Credit Agency” Trade and Forfaiting Review magazine (TFR). TRF is a leading trade and supply chain finance information resource.
While export credit agencies across the world have become more flexible and innovative in the aftermath of the global financial crisis, Ex-Im Bank has truly led the pack in rolling out new initiatives, adjusting existing programs, and stepping up its direct lending to make sure that deals get done that benefit U.S. exporters and support American jobs.
- Ex-Im Bank Chairman Fred P. Hochber