Businesses often shy away from exporting because of the lack of cash. Most feel they need collateral and cash in-hand to even start the process. The Export-Import Bank of the United States' (EXIM Bank) Working Capital Loan Guarantee unlocks the needed cash to purchase finished goods and/or the materials needed to make your product and pay employees who have direct action in the export side of your business
EXIM doesn’t replace your commercial bank; rather, it works with your existing lender who makes the loan, backed by the full faith and credit of the United States. EXIM Bank’s Working Capital Loan Guarantee provides a 90 percent guarantee to delegated authority lenders that extend loans to small and medium-size businesses to support operations related directly to products that are exported to international markets.
Delegated lenders have an agreement with EXIM Bank to process, underwrite and issue these loans without pre-approval from EXIM and going through a delegated authority lender expedites this process for US exporters. The money can be used for a specific transaction or as a revolving line of credit. Incentives are available to minority or woman-owned businesses as well as, rural and environmental businesses. There is a negotiable 1.75 percent facility fee based on the loan amount; however, this fee is reduced to 1.25 percent with an EXIM export credit insurance policy.
The Working Capital Loan Guarantee can increase your borrowing capacity because it enables banks to lend against a larger percentage of a company's accounts receivables and also collateral that banks typically do not. The program doesn’t have a minimum amount; no loan is too small.
Consider the challenges faced by CECA Supply & Services, a Texas-based supplier of oilfield equipment doing business with state-owned enterprises in Algeria.
Most of the business the company does in Algeria is through the public tender system, which requires companies to secure a bid bond from their lender for every bid, and a performance bond if they win the contract. Recently, CECA Supply & Services won a $5 million contract that required a 10 percent performance bond. Rather than tying up $500,000 in cash flow, the company used a Working Capital Loan Guarantee from EXIM Bank to secure working capital financing from their commercial lender, Amegy Bank of Texas. In addition, the Working Capital Loan Guarantee enabled the company to take on more and bigger deals, allowing its business to grow.
If you want to improve your cash flow, provide assurance to your foreign buyers that the deal is solid and grow your business through international sales, download An Exporters Guide to Working Capital Loan Guarantees. Exporter's Guide to Working Capital Loan Guarantee.