Introducing the Export-Import Bank of the United States

In a previous article for this blog, U.S. Government Export Assistance Programs, I discussed a variety of programs that can help you grow your exports. These programs can help your company locate new international markets for your products, finding foreign partners and distributors, and comply with export regulations.

Among the various government agencies that can provide assistance is the Export-Import (EXIM) Bank of the United States.

What Is the EXIM Bank?

The EXIM Bank is an independent U.S. government agency that helps finance the overseas sales of U.S. goods and services. It has programs that help small- and medium-sized businesses begin or expand their export efforts by helping minimize the risks inherent in international trade.

The EXIM Bank's programs of insurance, guarantees and buyer financing help make selling internationally less risky. The EXIM Bank enables U.S. companies—large and small—to turn export opportunities into real sales that help maintain and create U.S. jobs and contribute to a stronger national economy.

The Bank does not compete with private sector lenders but provides export financing products that fill gaps in trade financing. It assumes credit and country risks that the private sector is unable or unwilling to accept. EXIM Bank provides working capital guarantees (pre-export financing), export credit insurance, loan guarantees, and direct loans (buyer financing). No transaction is too large or too small.

The EXIM Bank reports that, on average, nearly 90% of its transactions directly benefit U.S. small businesses. This should encourage more small exporters to apply for and use the EXIM Bank's services and assistance programs.

80 Years of Helping Exporters

With more than 80 years of experience, EXIM Bank has supported more than $400 billion of U.S. exports, primarily to developing markets worldwide. It also helps to level the playing field for U.S. exporters by matching the financing that other governments provide to their exporters.

Governments of many other countries have their own version of export-import banks including Australia, Brazil, Canada, China, India and Mexico. There is even a forum of nine Asian export-import banks that promotes favorable trade services and programs among its member nations.

By providing some version of an export-import bank, countries help their exporters be more competitive in the global arena, which helps create and sustain new jobs. In addition, export-import banks help their countries' exporters compete in a global market. Essentially, it's all about jobs.

For example, Canada's export-import bank is called Export Development Canada (EDC) with the mission of "offering innovative financing, insurance and risk management solutions to help Canadian exporters and investors expand their international business." China's EXIM Bank is the official export credit agency of the Chinese government. It was established in 1994 and is the world's largest export credit agency.

Creating Jobs through Exports

The U.S. EXIM Bank's mission is to create jobs through exports. It provides guarantees of working capital loans for U.S. exporters, and it guarantees the repayment of loans or makes loans to foreign purchasers of U.S. goods and services. The EXIM Bank also provides export credit insurance that protects U.S. exporters against the risks of non-payment by foreign buyers for political or commercial reasons.

The EXIM Bank does not compete with commercial lenders, but assumes the risks they cannot accept. It must always conclude that there is reasonable assurance of repayment on every transaction financed. To qualify for EXIM Bank support, the exported product or service must have at least 50% U.S. content and must not affect the U.S. economy adversely.

It also guarantees financing for the export of goods or services, including commodities, as long as they are not military related. Details on the amount and structure of the guarantee percentage amount depend upon a number of factors and must be carefully worked out between the exporter and EXIM Bank.

The U.S. EXIM Bank is not a foreign aid or development agency; however, its programs often help U.S. exporters participate in development projects. EXIM Bank has co-financed projects with the U.S. Agency for International Development, the World Bank, and other multi-lateral development banks.

EXIM Bank Programs

The EXIM Bank offers a variety of programs designed to help U.S. exporters including:

Working Capital Guarantees

This program enables small and medium-sized U.S. companies to obtain loans to produce goods and services for export. With this program, you can arrange a loan from a commercial bank guaranteed by EXIM Bank. These funds enable you to purchase raw materials, supplies and equipment to fulfill your export sales order.

EXIM has generous advance rates and accepts a broad range of collateral for loans that generally extend one year, but that can go up to three years. This loan guarantee covers 90% of the commercial loan. These loans must be secured by export-related collateral.

A lender can advance your company up to 90% for accounts receivable up to 75% for inventory and work-in-progress. To post bid or performance bonds to support an export order, the EXIM Bank only requires a 25% collateral pool.

Export Credit Insurance

This program provides exporters and lenders protection against international buyer default. It minimizes political and commercial risk of buyer nonpayment, extends credit terms to international buyers leading to increased sales, and increases exporters’ borrowing capacity and cash flow.

Guarantees of Commercial Loans

This loan program helps lenders offer more attractive finance packages to international buyers of U.S. goods and services. It allows exporters to enter riskier markets, ensures that exporters and lenders get paid, and increases competitiveness by offering a source for competitive financing to your overseas customers.

Getting Started with the EXIM Bank

Business owners apply for these programs at an EXIM Bank regional office or through a lending partner. Exporters can also apply through their own bank, but you may have to suggest working with EXIM Bank. Loans of any size qualify for financing. Interest rates are set by the lender, and the loan has a term of one to three years.

On a personal note, a long-term friend and professional associate has used the U.S. EXIM Bank for more than 19 years. He exports worldwide and is very favorable towards the EXIM Bank.

He once told me, "Don't tell my competitors about the EXIM. They are one of the reasons I enjoy exporting successfully." This is about as good a testimony as it gets from a long-time user of the EXIM Bank. By the way, he owns a very small exporting company; he has only three employees including himself.

EXIM Bank Is a Tool to Be Used

The world of commerce has become more complicated and faster paced, which means exporters should get all the assistance they can. The EXIM Bank is one more tool that you and other small- and medium-sized exporters can use to your successful advantage if you take the time and effort to follow through.

From lumber to educational materials, from medical supplies to fire trucks, from Indiana to India, from New Hampshire to New Zealand, and from Arizona to Africa, the EXIM Bank has provided assistance to all of these and is there to help you.

This article was first published in April 2011 and has been updated to include current information, links and formatting.