basic-guide-to-exporting_Latest_eg_main_086196

to support ongoing export sales or to meet a temporary need for cash arising from asingle export transaction.The working capital guarantee offers generous advance rates, so that exporters canincrease their borrowing capacity. Those rates apply in:• Inventory—up to 75 percent advance rate (including work-in-process, i.e.,material that has been released to manufacturing, engineering, design, orother services)• Foreign accounts receivable—up to 90 percent advance rate. Guaranteedworking capital loans are secured by export-related accounts receivable andinventory (including work-in-process) tied to an export order. (For letters ofcredit issued under a guaranteed loan, Ex-Im Bank requires collateral for only 25percent of the value of the letter of credit.)Postexport FinancingEx-Im Bank offers export credit insurance to offset the commercial and politicalrisks that are sometimes associated with international trade. Under the majorityof policies, the insurance protects an exporter’s short-term credit extended for thesale of consumer goods, raw materials, commodities, spare parts, and other itemsfor which payment is expected within 180 days. If the buyer fails to pay, Ex-Im Bankreimburses the exporter in accordance with the terms of the policy. The majority ofpayment terms are up to 180 days, with some transactions qualifying for terms up to360 days. Ex-Im Bank insurance is the largest federal program supporting short-termexport credit.Ex-Im Bank insurance policies for exporters include the Small Business policy, theSingle-Buyer policy, and the Multi-Buyer policy. With prior written approval, anexporter can assign the rights to any proceeds from an Ex-Im Bank insurance policyto a lender as collateral for financing. Ex-Im Bank’s policies generally cover up to100 percent of defaults caused by specified political risks, such as war andexpropriation, and up to 98 percent of defaults arising from commercial risks,such as buyer default and insolvency. Exporters generally must meet U.S. contentrequirements and, under some policies, must insure all eligible foreign sales.Several private companies also offer export credit insurance that covers politicaland commercial risks. Private insurance is available, often at competitive premiumrates, to established exporters who have a proven history, although underwriting inparticular markets may be limited.Under a separate program, the Bank Buyer Credit Policy, Ex-Im Bank offersa guarantee to encourage banks and other lenders to make export loans tocreditworthy foreign buyers of U.S. goods and services. Ex-Im Bank’s guaranteesupports either medium-term financing (1–5 years for repayment after delivery orequipment installation) or long-term financing (up to 10 years for repayment) forheavy equipment and capital projects, such as power plants, telecommunicationssystems, and transport facilities and equipment.174U.S. Commercial Service • A Basic Guide to Exporting