basic-guide-to-exporting_Latest_eg_main_086196

covers the risk and enables the lender to extend credit. In that case, the buyer orbuyers can purchase more insurance over time.A third benefit is that a company’s working capital cash flow improves when alender’s line of credit is insured. Ex-Im Bank’s insurance transforms an exporter’sforeign accounts receivables into receivables insured by the U.S. government. A list ofqualified participating lenders is maintained at exim.gov. Fourth, new markets opento exporters where Ex-Im Bank offers coverage.Payment Terms and PoliciesShort-term means 180 days or less; this type of insurance typically covers noncapitalgoods, components, raw materials, spare parts, and most services. In the categoriesof consumer durables, capital goods, and bulk agricultural commodities, Ex-Im Bankinsurance policies extend up to 360 days. The products must be shipped from theUnited States and have at least 50 percent U.S. content (excluding markup).Medium-term insurance covers up to 85 percentof the contract value and protects amounts under$10 million on tenors up to 5 years. This financingapplies to international buyers of capital equipmentor related services.A Single-Buyer policy provides credit protection forshipments to one specific buyer. Premium rates arebased on tenor, type of buyer, and the risk rating forthe buyer’s country.Be sure to take out thecorrect insurance policyfor your export.A Multi-Buyer policy allows businesses to insure all sales to eligible internationalbuyers to whom they extend “open account” credit terms. Ex-Im Bank provides a 25percent discount on its short-term multi-buyer export credit insurance to exporterswho have an Ex-Im Bank or a Small Business Administration (SBA) working capitalloan. Ex-Im Bank’s popular Express Insurance product includes a streamlinedapplication, policy quotation, and buyer credit decisions up to $300,000 within5 working days.Lender PoliciesEx-Im Bank offers insurance policies for financial institutions that may supportexporters’ sales. A Bank Letter of Credit policy protects U.S.-based banks againstlosses on irrevocable letters of credit opened to finance U.S. exports. For example,when a foreign bank fails to make payments or reimbursements, Ex-Im Bank’s BankLetter of Credit will cover 95 to 100 percent.A policy for Financial Institution Buyer Credit protects lenders that financeinternational buyers of U.S. goods and services for periods of less than 1 year. Thepolicy covers commercial risks at a rate of 90 percent and 100 percent of political risksfor private-sector buyers.142U.S. Commercial Service • A Basic Guide to Exporting