Transcript Slide 1

Federal Government Guaranteed
Export Finance Programs:
A Tool for Business &
Economic Development
WEDA 2012 Spring/Summer Conference
John Brislin – President & CEO
Export Finance Assistance Center of Washington (EFACW)
Export Finance Assistance Center
of Washington (EFACW)
• Established by the state legislature in 1983 as a
non-profit to provide free export finance
counseling assistance to small and medium-sized
businesses that are currently exporting or are
interested in exporting their goods and services
• Funding comes from state legislature through
Washington State Department of Commerce
Export Finance Assistance Center
of Washington (EFACW)
• Represents the Export-Import Bank of the United
States (Ex-Im Bank) as a City-State partner
• Represents the Overseas Private Investment
Corporation (OPIC) as a Partner
• Works closely in cooperation with SBA
International Trade Specialist
Export Finance Assistance Center
of Washington (EFACW) Roles
• Export Finance Advisor
• Export Finance Matchmaker
• Export Finance Educator
Export Finance Assistance Center
of Washington (EFACW) Partners
• EFACW works with sponsors for events
• Industry and business associations
• Economic development and trade organizations
• Local governments and ports
• CERB Grant Recipients
Export Finance Assistance Center
of Washington (EFACW) Programs
• Export Resources – program focuses on
resources available to assist when exporting
• Outcomes of this type of program are:
– Encourage businesses to start/increase exporting
– Introduce export resources
– Instruct attendees on which organizations provide which
services
– Provide guidance on the types of issues that an exporter
may face and how export resources can work to resolve
those issues
Export Finance Assistance Center
of Washington (EFACW) Programs
• How to Export – program serves as “how to”
training for companies who have decided that
they would like to start exporting or increase
their exporting activity
• Outcomes of this type of program are:
–
–
–
–
–
Outline the makeup of an export plan
Learn how to select markets and find overseas buyers
Understand how to get paid and access financing
Generate ideas on how to move their goods
Understand basic export controls and shipping regulations
Export Finance Assistance Center
of Washington (EFACW) Program
• Lender Training – program focuses on Delegated
Authority lender training provided locally by ExIm Bank staff
• Outcomes of these programs are:
– Introduce lenders to government programs that reduce a
bank’s risk in a foreign transaction
– Teach lenders the nuances of government loan programs
– Increase participation in export finance government
guarantee loan programs
– Introduce lenders to programs their clients can use to find
more buyers and reach overseas markets, thus increasing
the revenue of the bank
Export Finance Assistance Center
of Washington (EFACW) Program
• Increasing Access to Trade Finance – new
program funded by SBA’s STEP Grant
• Current program has three phases:
1. Holding roundtable meetings with banks to find out why
they do not lend to exporters
2. Invite representatives of federal and state agencies to
speak to banks locally about how the government
programs work
3. Bring in federal agencies to provide lender training
locally to entice participation in the government
programs
Survey: Sources of Export Finance
What is your primary method of financing
your export operations?
•
•
•
•
•
•
Earnings/savings of the business
Traditional bank loan, no government program
Credit cards
Ex-Im Bank loans
Personal savings
SBA loan
Source: 2010 NSBA/SBEA Small Business Exporting Survey
62%
17%
15%
4%
2%
0%
Survey: Barriers to Export
What do you consider the main barriers to
selling your goods and/or services to foreign
customers?
•
•
•
•
•
•
I don’t have goods and/or services that are exportable
Don’t know much about it and not sure where to start
I’d worry too much about getting paid
Too costly
It takes too much time away from my domestic sales
Can’t get financing to offer foreign customers
Source: 2010 NSBA/SBEA Small Business Exporting Survey
49%
38%
29%
27%
17%
7%
Payment Methods
There are four primary methods of payment for global
transactions, with the level of risk varying for each
Export Import Bank of the United
States (Ex-Im Bank)
• Support U.S. exports when faced with competition
supported by foreign government entities in order
to create and sustain U.S. jobs
• Induces domestic banks to lend outside of usual
practices
• Strategic initiatives for certain industries and
countries
Export Import Bank of the United
States (Ex-Im Bank)
• Supplements commercial financing for pre and
post-export financing at small business rates
– Working Capital Guarantee for sellers
– Export Credit Insurance for sellers
– Medium & Long Terms Loan Guarantees for buyers
Sources of Export Financing
Pre-Export Financing
• Working Capital Line of Credit
– Most banks are not comfortable with export-related
assets as security for a loan.
– As a result, both Ex-Im Bank and SBA have guarantee
programs for lenders to induce them to provide a line of
credit to support exports.
Sources of Export Financing
Pre-Export Financing
• Export Working Capital Program (EWCP) – Ex-Im Bank
provides guarantees to banks to provide asset-based
lending program that loans against export raw
materials, work in progress, inventory, and foreign
accounts receivable.
• Key Features are:
– Exporters must adhere to the Bank’s requirements for
content, end use, and buyer country
– Non-refundable $100 application fee and a 1.5 percent
upfront facility fee is based on the total loan amount and a
one-year loan but may be reduced.
– Fees and interest charged by banks are usually negotiable
Sources of Export Financing
Post-Export Financing
• Export Credit Insurance – provides protection
against commercial and political losses, especially
on open account sales. It can be obtained from ExIm Bank as well as private insurers.
• Receivable Financing – with export credit insurance,
commercial and non-bank lenders are often willing
to lend into a portion of foreign accounts
receivable. With an enhanced assignment, some
companies will advance as much as 90 percent.
Sources of Export Financing
Buyer Finance
• Medium & Long Term Loan Guarantees – Ex-Im Bank
guarantees commercial loans to creditworthy foreign
buyers in emerging for purchases of U.S. goods and
services. They finance the purchase of high-value
capital equipment or services or exports to large-scale
projects that require medium- or long-term financing.
• Can also be used to finance:
–
–
–
–
purchase of refurbished equipment
Software
certain banking and legal fees
local costs and expenses.
Export Working Capital Guarantee
• A guarantee made to a commercial lender who makes a
loan to an exporter for the purchase or manufacturing
of U.S. goods and services to be exported.
• The loan expands access to EWC for supplier financing
and production costs.
• The loan maximizes the borrowing base by turning
export inventory and accounts receivable into cash.
• May be transaction specific or revolving line of credit
SBA Export Finance Programs
• Export Express Program
• Export Working Capital Program
• International Trade Loan Program
SBA Export Express
• SBA’s Export Express Loan provides fast and easy loans for
small exporters. 70% of all exporters have fewer than 20
employees.
• Streamlined financing up to $500,000. SBA Export Express
offers flexibility and ease of use to both borrowers and
lenders.
• Any business that has been in operation, although not
necessarily in exporting, for at least 12 full months and can
demonstrate that the loan proceeds will support its export
activity is eligible for Export Express.
SBA Export Express
Use of Proceeds
• Loan proceeds may be used for business purposes that
will enhance a company’s export development.
• Export Express can take the form of a term loan or a
revolving line of credit.
• Proceeds can be used to fund participation in a foreign
trade show, finance standby letters of credit, translate
product literature for use in foreign markets, finance
specific export orders, as well as to finance
expansions, equipment purchases, and inventory or
real estate acquisitions, etc.
SBA Export Working Capital Program
• Permits increased global competitiveness by
allowing the exporter to extend more liberal sales
terms
• Increases sales prospects in under-developed
markets which have high capital costs for importers
• Contributes to the growth of export sales
• Low fees and quick processing times
SBA Export Working Capital Program
• Exporters can apply for EWCP loans in advance of
finalizing an export sale or contract.
• With an approved EWCP loan in place, exporters have
greater flexibility in negotiating export payment
terms—secure in the assurance that adequate
financing will be in place when the export order is
won.
SBA Export Working Capital Program
Use of Proceeds
• Financing for suppliers, inventory or production of
export goods
• Export working capital during long payment cycles
• Financing for stand-by letters of credit used as bid or
performance bonds or down payment guarantees
• Reserves domestic working capital for the company’s
sales within the U.S.
SBA International Trade Loan (ITL)
• SBA’s International Trade Loan (ITL) provides small
businesses with enhanced export financing options for
their export transactions.
• The ITL is designed to help small businesses enter and
expand into international markets and, when
adversely affected by import competition, make the
investments necessary to better compete.
• SBA’s International Trade Loan offers a combination of
fixed asset, working capital financing and debt
refinancing with the SBA’s maximum guaranty— 90
percent— on the total loan amount.
SBA International Trade Loan (ITL)
Use of Proceeds
• For the facilities and equipment portion of the loan,
proceeds may be used to acquire, construct, renovate,
modernize, improve or expand facilities or equipment
in the U.S. to produce goods or services involved in
international trade.
• Working capital is an allowable use of proceeds under
the ITL.
• Proceeds may be used for the refinancing of debt
structured with unreasonable terms and conditions,
including any debt that qualifies for refinancing under
the standard SBA 7(a) Loan Program.
Sources of Export Financing
• Trade Finance Players
• Federal
–
–
–
–
Export Import Bank of the United States (Ex-Im Bank)
U.S. Small Business Administration (SBA)
U.S. Department of Agriculture (USDA)
Overseas Private Investment Corp (OPIC)
• Private
– Banks
– Non-Bank Lenders
– Insurance Companies
Export Finance Assistance Center of
Washington (EFACW) How to Help
Identify + Refer = Multiplier
• How you can help
–
–
–
–
Identify and refer clients who are interested in exporting
Identify and refer clients who are good candidates for
exporting
Host or sponsor export program
Information sharing about EFACW and other resources
Export Finance Assistance Center of
Washington (EFACW) How to Help
Questions to ask
1. Do you ship to Canada or Mexico?
2. Do you sell overseas?
3. Do you sell domestically to companies who export your
product?
4. Have your domestic sales flattened or decreased?
5. Has your company had a change in management?
6. Has your company had a change in ownership?
Export Finance Assistance Center
of Washington (EFACW) Teamwork
Exporting takes teamwork
to succeed
Teamwork is the fuel that allows
common people to attain
uncommon results
EFACW Contacts
John Brislin
President & CEO
206-256-6127
[email protected]
The Westin Building
2001 Sixth Avenue
Suite 2600
Seattle, Washington 98121
www.efacw.org
Natalie Campbell
Export Finance Program Manager
206-256-6115
[email protected]