On our July 12th WEGGinar™, “How to Finance Your Exports,” we ran out of time and had a couple of remaining questions that we didn’t have a chance to address. Below, Xiomara Creque-Bromberg, Export Finance Manager, Minority and Women Owned Business & Multiplier Outreach Division, Office of Small Business, Export-Import Bank of the United States, answers those questions.
Laurel Delaney: On receivable insurance, please detail how a business owner arrives at their premium on an export transaction. You had mentioned during your WEGGinar™ an example of a $30,000 sale; 65¢ per $100 for insurance; and, that the premium would be $195.00. Please drill down and make it very clear on how this works and nets out, thank you.
Xiomara Creque-Bromberg: The example used is the Express Insurance which is applicable to the most typical export credit transaction term (60 days) and for private buyer new exporters. The Premium is calculated based on the rate applicable to the policy, having said that; let’s use one example for Mexico.
Express Insurance policy to cover a private buyer in Mexico under a 60 days open account terms.
Export Sale: $30,000.00
Premium Rate $0.65 per $100.00 of the total export value
Export Sale $30,000.00
.0065
Premium Payable upon shipment $195.00
NO SHIPMENT NO PREMIUM PAYMENT
Laurel Delaney: Exim Bank has no minimum/no maximum dollar amount on deals. Having said that, what if I have a U.S. $5,000 transaction that I want financed, is that doable and if so, what paperwork would I complete; what would my fee be; and, what am I guaranteed? Are there any product/country restrictions that I should be aware of?
Xiomara Creque-Bromberg: Yes that’s doable. Submit an application on Exim on Line (EOL). There is no application fee for Express Insurance. On a $5,000.00 transaction for example:
Express Insurance policy to cover a private buyer in Mexico under a 60 days open account terms.
Export Sale: $5,000.00
Premium Rate $0.65 per $100.00 of the total export value
Export Sale $5,000.00
.0065
Premium Payable upon shipment $ 32.50
NO SHIPMENT NO PREMIUM PAYMENT
A one-time, refundable advance deposit of $500.00 is required before issuing the policy. On EXIM’s website www.exim.gov you will find the Country Limitation Schedule which will inform you what countries EXIM will provide support and the terms.
If the transaction is for working capital, please see the segment on pre-exporting financing below.
Laurel Delaney: You mentioned during your talk that SME exporters are 70% more profitable than non-exporting companies. Why?
Xiomara Creque-Bromberg: Exporting allows companies to diversify their customer base. Over 95% of the world’s consumers are outside the U. S.
Companies who are not exporting are losing buyers/customers if they are not marketing /tapping into that consumer base. Export Credit Insurance provides access to those consumers at no cost. See www.export.gov trade.gov/cs/factsheet.asp, “Exporting Is Good For Your Bottom Line.”
Laurel Delaney: On pre-exporting financing, funds to fulfill orders scenario, how does Exim Bank evaluate whether they will finance a deal or not?
Xiomara Creque-Bromberg: Working Capital is evaluated based on the creditworthiness of the U.S. exporter who is in need of funds to full field an order. There is no minimum or maximum amount. You would apply for a Working Capital loan with a commercial lender that has an agreement with EXIM, to who we provide the guarantee. The lender will inform you of the required forms and fees. There are product restrictions, i.e. EXIM will not support transactions selling to a foreign country’s military; U.S. content of the product must be at least 50%. On EXIM’s website www.exim.gov you will find the Country Limitation Schedule which will inform you what countries EXIM will provide support and the terms.
Laurel Delaney: You support service exports. How does that work? For example, if I run a design agency and provide $10,000 of work over 3 months to a customer in the UK, how would Exim Bank work with me to finance that transaction?
Xiomara Creque-Bromberg: There are a number of different insurance policy types to protect you from buyer non-payment. Policies for services are reviewed on a case-by-case basis. However the basic requirements is that personnel providing the services must be a U.S. citizen employed by the U.S. exporter and a foreign company must be invoiced.
Laurel Delaney: What’s the biggest stumbling block to SMEs not getting export financing?
Xiomara Creque-Bromberg: My experience has been companies that have not been established long enough to provide a positive track record/sales history. I have also found that companies may not do a good job vetting the foreign buyer.
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Note: Don’t miss our next WEGGinar™ 9/6/17 on “How to Win the Trade Game With Export Finance,” and presented by Jeff Deiss, Regional Export Finance Manager, Northern California | International Trade Finance Manager-Western US US Small Business Administration – Office of International Trade | US Export Assistance Center (www.sba.gov/international). Register here: https://register.gotowebinar.com/register/4753604763900421122.
Event is free of charge but you must register in advance to attend.
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