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Federal Government Guaranteed Export Finance Programs: A Tool for Business

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Federal Government GuaranteedExport Finance Programs: A Tool for Business & Economic DevelopmentWEDA 2012 Spring/Summer Conference. John Brislin President & CEO – PowerPoint PPT presentation

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Title: Federal Government Guaranteed Export Finance Programs: A Tool for Business


1
Federal Government GuaranteedExport Finance
Programs A Tool for Business Economic
DevelopmentWEDA 2012 Spring/Summer Conference
  • John Brislin President CEO
  • Export Finance Assistance Center of Washington
    (EFACW)

2
Export Finance Assistance Centerof Washington
(EFACW)
  • Established by the state legislature in 1983 as a
    non-profit to provide free export finance
    counseling assistance to small and medium-sized
    businesses that are currently exporting or are
    interested in exporting their goods and services
  • Funding comes from state legislature through
    Washington State Department of Commerce

3
Export Finance Assistance Centerof Washington
(EFACW)
  • Represents the Export-Import Bank of the United
    States (Ex-Im Bank) as a City-State partner
  • Represents the Overseas Private Investment
    Corporation (OPIC) as a Partner
  • Works closely in cooperation with SBA
    International Trade Specialist

4
Export Finance Assistance Centerof Washington
(EFACW) Roles
  • Export Finance Advisor
  • Export Finance Matchmaker
  • Export Finance Educator

5
Export Finance Assistance Centerof Washington
(EFACW) Partners
  • EFACW works with sponsors for events
  • Industry and business associations
  • Economic development and trade organizations
  • Local governments and ports
  • CERB Grant Recipients

6
Export Finance Assistance Centerof Washington
(EFACW) Programs
  • Export Resources program focuses on resources
    available to assist when exporting
  • Outcomes of this type of program are
  • Encourage businesses to start/increase exporting
  • Introduce export resources
  • Instruct attendees on which organizations provide
    which services
  • Provide guidance on the types of issues that an
    exporter may face and how export resources can
    work to resolve those issues

7
Export Finance Assistance Centerof Washington
(EFACW) Programs
  • How to Export program serves as how to
    training for companies who have decided that they
    would like to start exporting or increase their
    exporting activity
  • Outcomes of this type of program are
  • Outline the makeup of an export plan
  • Learn how to select markets and find overseas
    buyers
  • Understand how to get paid and access financing
  • Generate ideas on how to move their goods
  • Understand basic export controls and shipping
    regulations

8
Export Finance Assistance Centerof Washington
(EFACW) Program
  • Lender Training program focuses on Delegated
    Authority lender training provided locally by
    Ex-Im Bank staff
  • Outcomes of these programs are
  • Introduce lenders to government programs that
    reduce a banks risk in a foreign transaction
  • Teach lenders the nuances of government loan
    programs
  • Increase participation in export finance
    government guarantee loan programs
  • Introduce lenders to programs their clients can
    use to find more buyers and reach overseas
    markets, thus increasing the revenue of the bank

9
Export Finance Assistance Centerof Washington
(EFACW) Program
  • Increasing Access to Trade Finance new program
    funded by SBAs STEP Grant
  • Current program has three phases
  • Holding roundtable meetings with banks to find
    out why they do not lend to exporters
  • Invite representatives of federal and state
    agencies to speak to banks locally about how the
    government programs work
  • Bring in federal agencies to provide lender
    training locally to entice participation in the
    government programs

10
Survey Sources of Export Finance
  • What is your primary method of financing your
    export operations?
  • Earnings/savings of the business 62
  • Traditional bank loan, no government program 17
  • Credit cards 15
  • Ex-Im Bank loans 4
  • Personal savings 2
  • SBA loan 0
  • Source 2010 NSBA/SBEA Small Business Exporting
    Survey

11
Survey Barriers to Export
  • What do you consider the main barriers to selling
    your goods and/or services to foreign customers?
  • I dont have goods and/or services that are
    exportable 49
  • Dont know much about it and not sure where to
    start 38
  • Id worry too much about getting paid 29
  • Too costly 27
  • It takes too much time away from my domestic
    sales 17
  • Cant get financing to offer foreign customers
    7
  • Source 2010 NSBA/SBEA Small Business Exporting
    Survey

12
Payment Methods
There are four primary methods of payment for
global transactions, with the level of risk
varying for each
13
Export Import Bank of the United States (Ex-Im
Bank)
  • Support U.S. exports when faced with competition
    supported by foreign government entities in order
    to create and sustain U.S. jobs
  • Induces domestic banks to lend outside of usual
    practices
  • Strategic initiatives for certain industries and
    countries

14
Export Import Bank of the United States (Ex-Im
Bank)
  • Supplements commercial financing for pre and
    post-export financing at small business rates
  • Working Capital Guarantee for sellers
  • Export Credit Insurance for sellers
  • Medium Long Terms Loan Guarantees for buyers

15
Sources of Export FinancingPre-Export Financing
  • Working Capital Line of Credit
  • Most banks are not comfortable with
    export-related assets as security for a loan.
  • As a result, both Ex-Im Bank and SBA have
    guarantee programs for lenders to induce them to
    provide a line of credit to support exports.

16
Sources of Export FinancingPre-Export Financing
  • Export Working Capital Program (EWCP) Ex-Im
    Bank provides guarantees to banks to provide
    asset-based lending program that loans against
    export raw materials, work in progress,
    inventory, and foreign accounts receivable.
  • Key Features are
  • Exporters must adhere to the Banks requirements
    for content, end use, and buyer country
  • Non-refundable 100 application fee and a 1.5
    percent upfront facility fee is based on the
    total loan amount and a one-year loan but may be
    reduced.
  • Fees and interest charged by banks are usually
    negotiable

17
Sources of Export FinancingPost-Export Financing
  • Export Credit Insurance provides protection
    against commercial and political losses,
    especially on open account sales. It can be
    obtained from Ex-Im Bank as well as private
    insurers.
  • Receivable Financing with export credit
    insurance, commercial and non-bank lenders are
    often willing to lend into a portion of foreign
    accounts receivable. With an enhanced
    assignment, some companies will advance as much
    as 90 percent.

18
Sources of Export FinancingBuyer Finance
  • Medium Long Term Loan Guarantees Ex-Im Bank
    guarantees commercial loans to creditworthy
    foreign buyers in emerging for purchases of U.S.
    goods and services. They finance the purchase of
    high-value capital equipment or services or
    exports to large-scale projects that require
    medium- or long-term financing.
  • Can also be used to finance
  • purchase of refurbished equipment
  • Software
  • certain banking and legal fees
  • local costs and expenses.

19
Export Working Capital Guarantee
  • A guarantee made to a commercial lender who makes
    a loan to an exporter for the purchase or
    manufacturing of U.S. goods and services to be
    exported.
  • The loan expands access to EWC for supplier
    financing and production costs.
  • The loan maximizes the borrowing base by turning
    export inventory and accounts receivable into
    cash.
  • May be transaction specific or revolving line of
    credit

20
SBA Export Finance Programs
  • Export Express Program
  • Export Working Capital Program
  • International Trade Loan Program

21
SBA Export Express
  • SBAs Export Express Loan provides fast and easy
    loans for small exporters. 70 of all exporters
    have fewer than 20 employees.
  • Streamlined financing up to 500,000. SBA Export
    Express offers flexibility and ease of use to
    both borrowers and lenders.
  • Any business that has been in operation, although
    not necessarily in exporting, for at least 12
    full months and can demonstrate that the loan
    proceeds will support its export activity is
    eligible for Export Express.

22
SBA Export Express Use of Proceeds
  • Loan proceeds may be used for business purposes
    that will enhance a companys export development.
  • Export Express can take the form of a term loan
    or a revolving line of credit.
  • Proceeds can be used to fund participation in a
    foreign trade show, finance standby letters of
    credit, translate product literature for use in
    foreign markets, finance specific export orders,
    as well as to finance expansions, equipment
    purchases, and inventory or real estate
    acquisitions, etc.

23
SBA Export Working Capital Program
  • Permits increased global competitiveness by
    allowing the exporter to extend more liberal
    sales terms
  • Increases sales prospects in under-developed
    markets which have high capital costs for
    importers
  • Contributes to the growth of export sales
  • Low fees and quick processing times

24
SBA Export Working Capital Program
  • Exporters can apply for EWCP loans in advance of
    finalizing an export sale or contract.
  • With an approved EWCP loan in place, exporters
    have greater flexibility in negotiating export
    payment termssecure in the assurance that
    adequate financing will be in place when the
    export order is won.

25
SBA Export Working Capital Program Use of
Proceeds
  • Financing for suppliers, inventory or production
    of export goods
  • Export working capital during long payment cycles
  • Financing for stand-by letters of credit used as
    bid or performance bonds or down payment
    guarantees
  • Reserves domestic working capital for the
    companys sales within the U.S.

26
SBA International Trade Loan (ITL)
  • SBAs International Trade Loan (ITL) provides
    small businesses with enhanced export financing
    options for their export transactions.
  • The ITL is designed to help small businesses
    enter and expand into international markets and,
    when adversely affected by import competition,
    make the investments necessary to better compete.
  • SBAs International Trade Loan offers a
    combination of fixed asset, working capital
    financing and debt refinancing with the SBAs
    maximum guaranty 90 percent on the total loan
    amount.

27
SBA International Trade Loan (ITL) Use of
Proceeds
  • For the facilities and equipment portion of the
    loan, proceeds may be used to acquire, construct,
    renovate, modernize, improve or expand facilities
    or equipment in the U.S. to produce goods or
    services involved in international trade.
  • Working capital is an allowable use of proceeds
    under the ITL.
  • Proceeds may be used for the refinancing of debt
    structured with unreasonable terms and
    conditions, including any debt that qualifies for
    refinancing under the standard SBA 7(a) Loan
    Program.

28
Sources of Export Financing
  • Trade Finance Players
  • Federal
  • Export Import Bank of the United States (Ex-Im
    Bank)
  • U.S. Small Business Administration (SBA)
  • U.S. Department of Agriculture (USDA)
  • Overseas Private Investment Corp (OPIC)
  • Private
  • Banks
  • Non-Bank Lenders
  • Insurance Companies

29
Export Finance Assistance Center of Washington
(EFACW) How to Help
  • Identify Refer Multiplier
  • How you can help
  • Identify and refer clients who are interested in
    exporting
  • Identify and refer clients who are good
    candidates for exporting
  • Host or sponsor export program
  • Information sharing about EFACW and other
    resources

30
Export Finance Assistance Center of Washington
(EFACW) How to Help
  • Questions to ask
  • Do you ship to Canada or Mexico?
  • Do you sell overseas?
  • Do you sell domestically to companies who export
    your product?
  • Have your domestic sales flattened or decreased?
  • Has your company had a change in management?
  • Has your company had a change in ownership?

31
Export Finance Assistance Centerof Washington
(EFACW) Teamwork
Exporting takes teamwork to succeed Teamwork is
the fuel that allows common people to attain
uncommon results
32
EFACW Contacts
  • John Brislin Natalie Campbell
  • President CEO Export Finance Program Manager
  • 206-256-6127 206-256-6115
  • John.Brislin_at_efacw.org Natalie.Campbell_at_efacw.org
  • The Westin Building
  • 2001 Sixth Avenue
  • Suite 2600
  • Seattle, Washington 98121
  • www.efacw.org
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