EX-IM BANK EXPANDS ACCESS FOR SMALL BUSINESS EXPORTERS
December 23, 2008
The Export-Import Bank of the United States announced that it has enhanced several of its trade finance products to help counter the tightening of credit and the lack of liquidity in the export marketplace. The goal is to help U.S. exporters, particularly small businesses, to create and maintain export-related jobs.
The enhancements will increase access to direct lending and working capital loan guarantees. The latter are of critical importance to small and medium-sized exporters and companies providing goods and services destined for export by other U.S. companies, the bank said.
Using its existing authority to make direct loans, the Ex-Im Bank said it can work with lenders to structure transactions to adapt to their financial conditions or restrictions. The bank said this will be done on a case-by-case basis, focusing on supporting new exports either directly or indirectly.
The changes include a provision that allows companies that produce goods or services sold to U.S. companies and subsequently exported to apply for working capital loans guaranteed by the Ex-Im Bank. In the past, the working capital loan guarantee product has not been available to these companies.
The bank is raising from 10 percent to 100 percent the amount of a working capital loan guarantee available for these “indirect” exporters. In addition, the bank will now consider covering warranty letters of credit up to 20 percent of the loan amount or $1.5 million, whichever is lower, for a term of 12 months. This is a tripling of the previous ceiling of $500,000.
The bank said staff will now consider, on a case-by-case basis, reducing collateral requirements for letters of credit to 10 percent of face value, down from 25 percent currently. That compares with 100-percent cash collateral for all letters of credit generally required by the private sector.
Source: http://www.shippingdigest.com/news
