Trade Finance Guide

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GOVERNMENT ASSISTEDFOREIGN BUYERFINANCINGIntroductionMethods 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 FinancingThe international sales of high-value capital goods or services orexports which require medium-term financing, often pose specialchallenges to the exporter. One viable solution to these challengesis foreign buyer financing offered by SVB through the support ofthe Export-Import Bank of the United States (Ex-Im Bank). With Ex-Im Bank’s medium-term guarantees, SVB supports the purchasesof U.S. goods and services by creditworthy foreign buyers whoare unable to obtain financing they need through traditionalcommercial sources. With SVB’s foreign buyer financing, U.S.exporters can turn their business opportunities into real transactionsand get paid cash on delivery and acceptance of the goodsor services.Characteristics of Government AssistedForeign Buyer FinancingApplicabilitySuitable for the export of high-value capital goods that requireextended-term financing.RiskSVB and/or Ex-Im Bank assume all risks.Pros°°Buyer financing as part of an attractive sales packageCash payment upon shipment of the goods or servicesCons°°Subject to certain restrictions per U.S. foreign policyPossible lengthy process of approving financingTrade Finance Guide 32
GOVERNMENT ASSISTEDFOREIGN BUYERFINANCINGIntroductionMethods 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 FinancingKey Points° Helps turn business opportunities, especially in emergingmarkets, into real transactions for large U.S. exporters and theirsmall business suppliers.° Enables creditworthy foreign buyers to obtain loans needed forpurchases of U.S. goods and services, especially high-valuecapital goods or services.° Provides fixed-rate direct loans or guarantees for term financingoffered by SVB.° Available for medium-term (up to five years) and for certainenvironmental exports up to 15 years.Key Common Features of Ex-Im Bank’s Loan GuaranteesEx-Im Bank assists U.S. exporters by guaranteeing commercialloans to creditworthy foreign buyers for purchases of U.S. goodsand services. They are generally used to finance the purchase ofhigh-value capital equipment or services that require mediumtermfinancing. SVB’s foreign buyer financing, through the supportof Ex-Im Bank, is also used to finance the purchase of refurbishedequipment, software, and certain banking and legal fees, as well assome local costs and expenses.Ex-Im Bank requires the foreign buyer to make a cash payment tothe exporter equal to at least 15 percent of the U.S. supply contract.Repayment terms up to five years are available for exports of capitalgoods and services. Exports to certain sectors may be eligible forrepayment terms up to 12-15 years. Military items are generally noteligible for Ex-Im Bank financing nor are sales to foreign militaryentities. In addition, goods must meet the Bank’s foreign contentrequirements. Finally, Ex-Im Bank financing may not be available incertain countries and certain terms per U.S. foreign policy.Key Features of Ex-Im Bank Loan Guarantees° Loans are made by SVB and guaranteed by Ex-Im Bank.° 100 percent principal and interest cover for 85 percent of U.S.contract price.Trade Finance Guide 33
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 and 20: EXPORT WORKING CAPITALFINANCINGIntr
Page 21 and 22: THE EXPORT-IMPORTBANK WORKING CAPIT
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: FORFAITINGIntroductionMethods of Pa
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