EXIM Bank's mission is to help grow U.S. jobs through exports. The U.S. content in EXIM supported exports helps ensure that U.S. jobs benefit from EXIM Bank products. EXIM offers two short-term (i.e., one year products) -- export credit insurance and working capital loan guarantee for small businesses. Earlier this week we discussed how to calculate US content for small business products (part 1), but small businesses can also be "service exporters", which range from engineering services, IT services, and architectural services to legal services and advanced manufacturing industries. To qualify for EXIM products from a services perspective, a small business must meet the criteria below.
- Eligible U.S. services export contracts or purchase orders are those that are signed by the U.S. entity.
- To qualify as eligible U.S. content, the person(s) performing the service must be a legal U.S. worker(s), as evidenced by the employer having an I-9 form on file for the employee.
- Foreign-developed licenses owned by a U.S. entity for one year or more at the time of application are considered U.S. content. (Note: Foreign-developed licenses owned for less than one year are considered foreign content and thus ineligible for short-term support.)
- Insurance policy services endorsements must exclude contract cancellation/frustration risks.
- The exporter must discontinue providing services if the borrower is in default for more than 90 days and/or if the buyer terminates the contract before completing the contract.
The following are content requirements:
- Each service listed or described on an invoice must have more than 50% U.S. content based on all direct and indirect costs including, but not limited to, labor, research, and administrative costs, exclusive of profit; or
- The aggregate content of all services included in a single invoice must be more than 50% U.S. content based on all direct and indirect costs including, but not limited to, labor, research, and administrative costs, exclusive of profit; or
- If the U.S. content of any service or aggregate U.S. content of all services in a single invoice is 50% or less, only the U.S. content is eligible.
If the service or the aggregate services in a single invoice meets the more than 50% U.S. content eligibility threshold described above, the entire gross invoice value (sales price) is normally eligible for coverage at the applicable percentage. If the U.S. content of the service or aggregate services in a single invoice is 50% or less, EXIM may only support the value of the U.S. content at the applicable percentage. Based on the product (i.e., working capital loan guarantee or export credit insurance), standard percentages of coverage are 90% to 95%.
Content Example – A Computer Software Package Export
A U.S. small business is exporting a customized software package with the following characteristics:
- The main module of the software package was developed in the U.S.
- Materials and direct overhead - $20,000 (U.S. Content)
- Labor – $10,000 (U.S. Content)
- Labor – $5,000 (Eligible Foreign Content)
The export is eligible for EXIM support as the U.S. content, determined by U.S. costs, is more than 50% of the total costs of the export ($30,000/$35,000=86%). Consequently, the Bank can support 100% of sales price ($45,000).
EXIM Bank provides financing solutions to help service exporters increase foreign sales while mitigating the risk when dealing with foreign transactions. To speak to your local EXIM about whether your small business is eligible for the Bank's products or if you have U.S. content questions, please click below: