EXIM has Short-, Medium-, and Long-Term programs and the program type correlates with the length of the repayment term offered by a U.S. exporter or lender to an international buyer. Medium-Term programs consist of Credit Insurance (a type of insurance policy that protects U.S. exporters or lenders against international buyer nonpayment due to commercial and political risks) and Loan Guarantees (a guarantee to lenders of financing to creditworthy international buyers for purchases of U.S. capital equipment) with tenors of 1 to 5 years, sometimes up to 7 years, with financed loan amounts less than $25 million. U.S. capital equipment export transactions are Medium- or Long-Term due to the products being considered fixed assets by the buyers and typically financed for those tenors, while consumer goods, industrial components, and raw materials export transactions typically have a tenor duration of less than one year and qualify under the Short-Term program assuming certain terms, conditions, and requirements are met.
There are two groups within EXIM that handle Medium-Term deals – the Transportation Division within the Office of Board Authorized Finance (OBAF) and the Business Credit Division within the Office of Small Business (OSB). Aircraft and rail export transactions are within the scope of the Transportation Division, other transactions are within the scope of the Business Credit Division.
Medium-Term structures come in two forms – Supplier Credits and Buyer Credits. In a Supplier Credit structure, the applicant is a U.S. exporter seeking to offer competitive credit terms to its international buyer with repayment tenure greater than one year. The Buyer Credit structure differs in that the applicant is a commercial bank or EXIM approved non-bank lender seeking either Medium-Term Credit Insurance or a Medium-Term Loan Guarantee. The steps from initial discussions with the international buyer through loan closing and loan servicing differ based on the applicant.
EXIM’s Medium-Term fees depend on several factors, including the type of product (insurance or guarantee), repayment period, and exposure fee level (by country or obligor). This calculator offers non-binding fee estimates. Additionally, any lender would charge a loan arrangement fee and interest.
EXIM can guarantee or insure a maximum of 85% of the C.I.F. invoice amount after a 15% cash down payment amount by the international buyer. The loan amount usually matches EXIM’s guaranteed or insured amount of the invoice value plus the EXIM exposure fee (guarantee) or insurance premium. In many cases local costs invoiced by the U.S. exporter may also be included with restrictions. EXIM’s underwriting department also requires information about the international buyer and a document checklist is provided to make it easier for U.S. exporters or their bankers to submit an application.
Medium-Term programs should be a consideration for exporters of capital equipment that require longer repayment terms. For more information, contact an EXIM trade finance specialist.
