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Increasing Your
Export Sales
Short-Term Insurance
Overview & SingleBuyer Products
Trade Financing Solutions
Export-Import Bank
of the United States
Overview
Most frequently used
program: Over 60% of total
transactions
Total authorizations: $2.4
billion FY 2000
Export–Import Bank of the United States
Overview
Purpose:
Provide foreign credit risk protection
for exporters and lenders
Covers:
Commercial & political risks of
default
Does Not Cover:
Product disputes
Cancellation of contract
Export–Import Bank of the United States
Types of Exports Supported
Raw materials, spare parts and
consumable items and services:
Up to 180 day terms
Capital equipment, bulk agricultural
items, fertilizer and consumer
durables:
Up to 360 day terms
Export–Import Bank of the United States
Why Buy Insurance?
Risk Mitigation
Financing Aid
Competitiveness /
Marketing
Export–Import Bank of the United States
Benefits – Risk Mitigation
Risk Mitigation:
Provides foreign credit risk
protection against commercial
risks of default, bankruptcy, and
political risks of default, political
violence, government
intervention, and transfer or
inconvertibility risk.
Export–Import Bank of the United States
Benefits - Financing
Financing:
Ability to assign foreign A/R

Increase collateral base

Get $$$
Export–Import Bank of the United States
Benefits - Financing
Cash Flow:
Receivables
Annual Domestic Credit Sales
Annual Foreign Credit Sales
Turnover of 60 days,
$1,500,000/6 = Average Outstanding
($125,000 foreign)
Lender’s Deductions
Foreign Receivables
Uninsured
Insured
Policy Deductible
5% Commercial Risk Retention
Borrowing Base Availability
Uninsured Borrowing Insured
Base
Borrowing Base
$1,000,000
$1,000,000
500,000
500,000
250,000
250,000
(125,000)
$125,000
(6,250)
$243,750
95% increase!
Export–Import Bank of the United States
Benefits - Competitiveness
Competitiveness/Marketing:
Extend open account credit terms directly
to foreign buyers

Compete with sellers from other countries
Cheaper for buyer than L/C’s
Pursue riskier buyers/countries
Sell more to existing buyers with less risk
Export–Import Bank of the United States
Benefits
Sell more without increasing risk:
Sales - uninsured:
exposure:
Sales - insured:
exposure:
$ 200,000
$ 200,000
$4,000,000
$ 200,000
(assuming 95% coverage)
Export–Import Bank of the United States
US Content Requirements
Short-Term Insurance…
Product must be at least 50% US
content (labor and material),
excluding mark-up
Export–Import Bank of the United States
S-T Export Credit Insurance
Single-Buyer Policies
Export–Import Bank of the United States
Policy Types
Exporter:
Financial Institution:
Single-buyer
Export Letter of
Credit
Financial Institution
Buyer Credit (FIBC)
Export–Import Bank of the United States
Single Buyer Policy - Exporter
Eligibility:
 Covers single or multiple sales to individual
buyers
 Terms generally up to 180 days; 360 days for
capital goods and bulk agricultural products
Coverage (Commercial & Political):
 90% for private buyers
 95% for L/C transactions
 98% for bulk agricultural products
 100% for sovereign buyers
Export–Import Bank of the United States
Single-Buyer Policy
Features cont.:
 No application or commitment fees
 90 day commitment on approvals
 Risk based premium
Small
Business
All
Other
 Minimum premium:
 Sovereign / political only coverage:
 L/C’s / banks / non-sovereign govt:
 Private buyers:
$ 500 $ 750
$ 750 $1,500
$1,000 $2,500
Export–Import Bank of the United States
Single-Buyer Policy
Other features:
 Assignment of
proceeds to a lender
 Claim filing window
(from due date)
Small
Business
All
Other
Enhanced/
Documentary
or Simple
Simple
90-240 Days
Export–Import Bank of the United States
Bank L/C Policy
 Allows banks to confirm L/Cs and
refinance up to 180/360 days with coverage
 Irrevocable letters of credit must conform
to UCP 500
 95% coverage - commercial and political
risk
 98% coverage - agricultural products
 100% coverage - sovereign issuing bank
 Recourse (“passback”) to a third party for
uninsured amount allowed
Export–Import Bank of the United States
Bank L/C Policy
Risk-based premium
Bank Credit Limits
 Discretionary credit limits
 Credit
 Ledger
 Issuing Bank Credit Limits (see STCS)
Pre-presentation cover available
$2,000 minimum annual premium
Documentary – Bank gets Exporter/
Beneficiary Certificate
Claim filing window (past due) 60 –
120 days
Export–Import Bank of the United States
Financial Institution Buyer Credit
 Covers extension of SHORT-TERM direct buyer/supplier credit
loans and reimbursement loans
 Single-buyer policy
 Two formats of coverage:
 Documentary – Protects bank against defects in the underlying
transaction (i.e., Exporter Certificate)
 Non-Documentary – Bank is at risk for transaction
conformance to policy
 Maximum Coverage:
Documentary Non-Doc.
Sovereign obligors
100%
N/A
Non-sovereign obligors/
guarantors
90%
90%
Bulk agricultural commodities
98%
98%
L/C transactions
Excluded
Excluded
Export–Import Bank of the United States
Financial Institution Buyer Credit
 No application or commitment fees
 90 day commitment on approvals
 Policy Period – up to 1 year
 Risk-based premium rates
 Minimum premiums (payable in advance):
Sovereign / political-only coverage:
$ 750
L/C’s, banks, & non-sovereign gov’ts:
$1,500
Private buyers:
$2,500
Export–Import Bank of the United States
Financial Institution Buyer Credit
Other features:
Documentary
Non-doc.
Eligible transactions
Buyer Credits/
SB Supplier
Credits
Yes
All other
Supplier
Credits
No
Exporter/Beneficiary
Certificate
Claim filing window
(from due date)
90-240 days
Financial Institution must remain at risk for
uninsured retention
Export–Import Bank of the United States
FIBC – Direct Credit
Bank
Buyer
2
3
1
Exporter
1. Contract for Goods - outside the insurance policy
2. Buyer obligation created between buyer and bank
3. Bank pays out exporter upon presentation of trade documents
Export–Import Bank of the United States
FIBC – Reimbursement Loan
Bank
3
Buyer
4
2
Exporter
1
1. Contract for goods -- basis for the insurance policy
2. Buyer pays exporter for goods
3. Bank reimburses buyer
4. Buyer obligated to pay within 180 (360) days
Export–Import Bank of the United States
S-T Export Credit Insurance
Multi-Buyer Policies
Export–Import Bank of the United States
Multi-Buyer Policy Products
Small Business Multi-
Buyer:
 Small Business
 Environmental
 Umbrella
Standard Multi-Buyer
Policy
Financial Institution

Financial
Institution
Supplier Credit
Export–Import Bank of the United States
Multi-Buyer Policy Products
Common features:
 Claim filing window (past
due): 90 – 240 days
 Cover capped at WSJ prime <
0.5% (does not apply to FISC)
 Shipments (financings)
reported month-to-month
basis
Export–Import Bank of the United States
Small Business Policy
Ex-Im Bank’s most popular product
Eligibility:
At least 1 year of successful operations
Positive net worth
At least 1 principal engaged full time in
company
No more than $5,000,000 in average
annual export credit sales over prior 2
years
Meets SBA definition of “small”
Export–Import Bank of the United States
Small Business Policy
Features:
12 months, renewable
Whole turnover
95% commercial, 100% political
coverage
Buyer credit limits
 Discretionary credit limits
 Credit
 Ledger
 Special buyer credit limits (see STCS)
$500 refundable advance premium
Enhanced or simple assignment of
proceeds to a lender
Export–Import Bank of the United States
Small Business Policy - Premia
Premium Rate Schedule
Payment Terms
(days o/a)
Transaction Type
Class I
Class I I
Class I I I
1-60
$0.19
$0.24
$0.65
61-120
0.32
0.39
1.06
121-180
0.41
0.50
1.35
181-270
0.51
0.63
1.70
271-360
0.62
0.77
2.08
Note: Premium is charged per $100 of gross invoice value.
Export–Import Bank of the United States
Small Business Policy Sample
Annual Export Credit Sales:
Std Credit Terms Extended:
Aggregate Policy Limit:
Deductible:
Premium Rate:
Exclusions:
Special Conditions:
Discretionary Credit Limits:
$2,000,000
60 days
$500,000
$0
$0.65 per $100 of gross
invoice value (from rate sheet)
Confirmed irrevocable L/C
Sales to subsidiaries/affiliates
Preshipment
Consignment
Payments in foreign currency
Nonacceptance
Credit $25,000
Ledger $50,000
Export–Import Bank of the United States
Assignment of Policy Proceeds
Simple Assignment
 Lender maintains recourse back to
exporter (eg, Policy violations resulting in
claim denial)
OR
Enhanced
 Available under small business policy
 Bank obtains documents related to
transactions, e.g.:
 Copy of invoice
 Export bill of lading
 Purchase order
Export–Import Bank of the United States
“Enhanced” Assignment
Benefits to Banks:
 Claim payment is made to assignee
regardless of provisions of the policy which
would be reason for claim denial
 Bank may file claim in place of insured but
must have all required documents
 Bank is paid; Ex-Im Bank pursues buyer or
exporter
 No risks to Banks beyond their control
Export–Import Bank of the United States
Small Business Environmental Policy
Eligibility:
Same as Small Business Policy
Products/services environmentally
related
Features:
Same as Small Business Policy,
including “Enhanced” assignment
No export credit sales volume entry
or exit threshold provided continued
eligibility as “small” business
Export–Import Bank of the United States
Multi-Buyer Policy
Eligibility:
 Covers SHORT-TERM sales made
during a 12-month period
 Reasonable spread of risk
Coverage:
 Option A: 90% commercial, 100%
political; or
 Option B: 95% for commercial and
political risks
 100% on sovereign buyers
 98% for bulk agricultural products
Export–Import Bank of the United States
Multi-Buyer Policy
Premium:
$500 refundable advance premium
Risk-based premium:





Payment terms
Type of buyer
Spread of country risk
Transaction type
Previous export experience
First loss deductible
Simple assignment of proceeds to a
lender
Claim filing window (past due) 90-240 days
Export–Import Bank of the United States
Financial Institution Supplier Credit
 Lender financing export A/R on a select basis
 $2,000 minimum annual premium
Two formats:
Documentary
Non-doc.
Eligible exporters
SB
SB – all other
ENB Policy
< $5,000,000
avg. annual
export
Exporter Certificate
Yes
No
Percentage of coverage
Sovereign
100
100
Political
100
90
Commercial
95
90
Bulk ag.
98
98
Premium rates
SB r/s
Country r/s
 No cap on interest rate
 Lender must remain at risk for uninsured retention
Export–Import Bank of the United States
ST Rate Sheet
MEXICO
Short Term Single Buyer Insurance
Term
SOV/POL/PS:
F.I.:
NFI:
Sight LIC
$0.04
$0.04
$0.12
CAD/SDOP
$0.07
$0.09
$0.24
1-60
61 -1.20
$0.19
$0.24
$0.65
$0.32
$0.39
$1.06
121 -180
$0.41
$0.50
$1.35
181 - 270
$0.51
$0.63
$1.70
271 - 360
$0.62
$0.77
$2.08
Pre-Presentation for Letters of Credit
Term
Sight - 90
91 –120
SOV:
F.I.:
$0.04
$0.04
$0.05
$0.07
121 -180
$0.07
$0.09
181 - 270
$0.11
$0.13
271 - 360
$0.15
$0.18
Sov= Sovereign; POL=Political Only; PS=Preshipment; F.I. = Financial Institution (public/private); NFI=Non Financial Institution (public/privato)
Export–Import Bank of the United States
Insurance Claims - FY 1999
Claims Filed *:
Claims Approved:
Claims Denied:
Claims Withdrawn:
218
164
29
18
$48.1MM
95.5%
2.1%
1.5%
Reasons for Denial:
 No Premium
 Missing Documents
 Late Filing
* 100% Commercial Risk
Export–Import Bank of the United States