Trade Finance Guide

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EXPORT WORKING CAPITALFINANCINGIntroductionMethods of Paymentin International TradeCash-in-AdvanceDocumentary CollectionsOpen AccountExport Working CapitalFinancingExport Credit InsuranceSVB’s Asset PurchaseProgram (APP)ForfaitingLetters of CreditThe Export-ImportBank Working CapitalProgramsGovernment AssistedForeign Buyer FinancingKey Points° Funds may be used to acquire materials, labor, inventory, goodsand services for export.° A facility can support a single export transaction (transactionspecific short-term loan) or multiple export transactions (revolvingline of credit) on open account terms.° A government guarantee may be needed to obtain a facility thatcan meet your export needs.° Risk mitigation may be needed to offer open account termsconfidently in the global market.Why a Government Guarantee May Be NeededWhy Risk Mitigation May Be NeededWhile export working capital financing will certainly make it possiblefor exporters to offer open account terms in today’s highly competitiveglobal markets, the use of such financing itself does not necessarilyeliminate the risk of nonpayment by foreign customers. In order tooffer open credit terms more confidently in the global market, theuse of some forms of risk mitigation may be needed. In addition,the use of risk mitigation may be necessary for exporters to obtainexport working capital financing. For example, SVB may require theexporter to obtain export credit insurance as a condition of providingworking capital and financing exports. Other forms of risk mitigationwill be discussed later in this guide.The Export-Import Bank of the United States and the U.S. SmallBusiness Administration offer programs that guarantee exportworking capital facilities to U.S. exporters. With these programs,U.S. exporters are able to obtain needed facilities from SVB whenfinancing is otherwise not available or when their borrowing capacityneeds to be increased.Trade Finance Guide 20
THE EXPORT-IMPORTBANK WORKING CAPITALPROGRAMSIntroductionMethods of Paymentin International TradeCash-in-AdvanceLetters of CreditDocumentary CollectionsOpen AccountExport Working CapitalFinancingThe Export-ImportBank Working CapitalProgramsExport Credit InsuranceSVB’s Asset PurchaseProgram (APP)ForfaitingGovernment AssistedForeign Buyer FinancingGovernment-guaranteed export working capital facilities can providethe exporter with the liquidity to accept new business, help growexport sales, and compete more effectively in the global marketplace.The Export-Import Bank of the United States (Ex-Im Bank) worksto offer such programs to U.S. firms through SVB. Through thesegovernment-guaranteed export working capital programs (EWCP),U.S. exporters are able to obtain needed facilities from commerciallenders when financing is otherwise not available or when theirborrowing capacity needs to be increased.Characteristics of an EXPORT-IMPORT BANKWORKING CAPITAL PROGRAMApplicabilityWhen commercial financing is otherwise not available or when preapprovedborrowing capacity is not sufficient.RiskWithout the use of proper risk mitigation measures, the exporter isexposed significantly to the risk of nonpayment.Pros°°Encourage lenders to make financing to exportersEnable lenders to offer enhanced advance ratesCons°°Cost of obtaining and maintaining a guaranteed facilityRisk mitigation may be needed, incurring additional costsTrade Finance Guide 21
Page 1 and 2: Trade Finance GuideA guide and over
Page 3 and 4: INTRODUCTIONIntroductionMethods of
Page 5 and 6: METHODS OF PAYMENT ININTERNATIONAL
Page 7 and 8: CASH-IN-ADVANCEIntroductionMethods
Page 9 and 10: CASH-IN-ADVANCEIntroductionMethods
Page 11 and 12: LETTERS OF CREDITIntroductionMethod
Page 13 and 14: DOCUMENTARYCOLLECTIONSIntroductionM
Page 15 and 16: DOCUMENTARYCOLLECTIONSIntroductionM
Page 17 and 18: OPEN ACCOUNTIntroductionMethods of
Page 19: EXPORT WORKING CAPITALFINANCINGIntr
Page 23 and 24: THE EXPORT-IMPORTBANK WORKING CAPIT
Page 25 and 26: EXPORT CREDITINSURANCEIntroductionM
Page 27 and 28: SVB’s Asset PurchaseProgram (APP)
Page 29 and 30: FORFAITINGIntroductionMethods of Pa
Page 31 and 32: FORFAITINGIntroductionMethods of Pa
Page 33 and 34: GOVERNMENT ASSISTEDFOREIGN BUYERFIN
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