Q: Is Export Credit Insurance cost-prohibitive for small businesses?
A: Depending on an exporter’s needs and risk exposure, costs may vary from $0.55 to $1.77 per every $100 of invoice value [1]. Our most popular product Express Insurance, for example, allows the exporter to pay $0.65 per every $100 of invoice value for credit terms up to 60 days. For a shipment of $10,000 to a foreign buyer, the premium due is just $65 ($10,000 x .0065). The best way to find out the exact costs for your business is to contact an EXIM export finance specialist directly.
Q: I am a busy person; how long will it take to get approved for insurance? How difficult is the application?
A: The application is online, simple and user friendly. However, most exporters work with a trade finance broker and the broker’s fee is no additional cost, as it is included in the premium paid. Brokers guide exporters through the application process and provide ongoing service, such as assistance in filing claims. The turnaround time for Express Insurance is typically under 10 business days [2]. To find out more about the application process, schedule a consultation with a highly experienced export financial specialist today.
Q: What deal size would make it worthwhile? Is my business too small?
A: No deal is too small. EXIM insures deals that range from a few hundred dollars to billions of dollars. For most policies, exporters pay premiums only on products that they ship, assuring that there are no lost premium dollars. For buyers of Multi-Buyer Insurance, there is also no minimum annual premium required. There are special policies for small businesses that offer up to 95% coverage against nonpayment by foreign buyers on short-term credit sales, with no deductible.
Q: What’s the difference between Single-buyer vs. Multi-buyer Insurance?
A: There are policy options that cover a single foreign buyer, a defined set of many buyers, or the exporter’s entire foreign buyer portfolio. Policies cover both commercial and political risks. For Single-Buyer Insurance, coverage rates range from 90-100% of the invoice value at an affordable premium.
For Multi-Buyer Insurance, no advance premium is required from small businesses (fewer than 500 employees), and no minimum annual premium is required. Standard coverage is 95% of the invoiced amount, and sovereign buyers are covered at 100%. Bulk agricultural commodity exports qualify for 98% coverage. To find out which type of insurance best suits your business needs, contact an EXIM export finance specialist.
Q: Can you explain in simple terms why my business needs this insurance?
A: Export credit insurance equips exporters to manage risk and offer more attractive credit terms to foreign buyers. At the same time, having export credit insurance unlocks more attractive financing options. Banks will often allow exporters to borrow against insured receivables that would otherwise be excluded from the borrowing base. Some exporters use EXIM’s export credit insurance to conduct due diligence on their foreign buyers. Before EXIM approves an export credit insurance application, the Bank assesses the credit worthiness of an exporter’s foreign buyers. Thus, if an exporter’s application is approved by EXIM, the burden of credit management decisions is effectively transferred to EXIM and the exporter can focus on his core business operations.
Q: What are the main eligibility requirements to qualify for EXIM Support?
A: Small businesses meet basic eligibility requirements if they: (1) have been in business for at least a year; (2) have at least one person working in the firm full-time; (3) have a positive net worth; and (4) export products and/or services that have more than 50% U.S. content based on all direct and indirect costs (e.g. labor, materials, and administrative costs). To learn more about the full list of EXIM eligibility and regulations, download our Export Credit Insurance eBook.
[1] Pricing examples for small business Multi-Buyer policies and Express Insurance.
[2] Not all applications are approved in this timeframe and the 10 days period is assessed from the date that EXIM receives a complete application.
