EXIM Bank of the United States —What You Need to Know

EXIM Bank of the United States —What You Need to Know

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In an increasingly globalized economy, companies with the ability to engage in overseas markets have the opportunity to achieve significant revenue growth. The Export-Import Bank of the United States (EXIM) can help make that financial growth possible by extending lending opportunities and financial assistance to businesses of all shapes and sizes.

From large corporations that supply agricultural and construction supplies and machinery to small niche businesses like wineries and gourmet food purveyors, EXIM Bank has empowered business owners to experience positive growth in foreign markets while expanding both revenue and job opportunities on the home front.

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How can EXIM Bank help your business?

Though foreign markets can provide room to grow, they also present a substantial roadblock when it comes to accessing small business financing, something that can hinder future growth. Lenders aren’t always poised to take on potentially risky commercial investments. Additionally, some foreign customers simply can’t afford the upfront cost of United States goods or services, making it hard for U.S. companies to enter into those markets. This is where EXIM Bank can help.

EXIM provides a wealth of services and resources to small businesses wishing to enter the foreign trade market (Check out the EXIM website for a full list), but of particular interest to small business owners is the Working Capital Loan Guarantee.

In short, EXIM Bank works with your private bank to help you secure the finances necessary for overseas expansion. Assistance can come in the form of a single order loan or revolving credit, which is fulfilled by a private lender. Although the loan does come from a private lender, EXIM Bank works to back, or guarantee, 90% of your loan, which mitigates their risk while keeping your interest rate lower.

Are you qualified?

EXIM Bank does require interested businesses to meet specific base requirements if they wish to apply. Before heading down this path to meet your small business financing needs, be sure that you can meet the following qualifications:

  • Your company has been in business for at least one year
  • You have at least one full-time employee
  • Your net worth is positive
  • The content and aggregated composition of your product is as least 50% U.S. based; this includes labor and materials as well as things like administrative costs and research.
  • The product must be shipped from the U.S. to the foreign buyer.

What are the loan terms?

EXIM loan terms vary based on factors like the loan type, industry, and business size. However, small business financing through the Working Capital Guarantee Loan is typically subject to the following:

  • Loan Amount: No limit for loan processed directly through EXIM Bank. Otherwise, loans can range from $1MM to $150M, with limited being exceeded upon review and approval by EXIM Bank.
  • Loan Duration:  Typically 1 year (can be up to 3 yrs)
  • Rates and fees: Interest rates and fees charged by the commercial lender. The EXIM bank charges a $100 application fee for a final commitment to the loan, plus a facility fee, which is a percentage of the total loan amount (1.25 – 1.75% for one year loans, 0.875% for loans up to 6 months.
  • Collateral: Can be in the form of export inventory (must not exceed 60% of the collateral requirement), personal and corporate guarantees can also be used (personal guarantees must be made by those who own 20% or more of the business), assignment of Letters of Credit or foreign credit insurance (when applicable) can also be used.
  • Borrowing Base Certificates:  These are required on a monthly basis.

Application Tips

To access much needed small business financing and increase the chances of loan approval, it’s important to review all requirements and make sure that you can support all the information provided during the application process; this includes information about your company makeup as well as your product, specifically invoices and other paperwork to support the 50% U.S. content requirement.

In addition to that, EXIM works with lenders across the United States and for small business owners seeking to expand into foreign markets, it would be beneficial, if possible, to work with lenders who are familiar with this particular lending opportunity.

EXIM bank also recommends interested small business owners to visit their regional EXIM office to work directly with a consultant who can help them navigate the process.

It’s also worth noting that EXIM has committed to helping minority-, women-, and veteran-owned businesses grow, and since 2009, EXIM Bank has increased financing approval for these specific groups. As of 2014, “almost one in five” authorizations were for small businesses owner minorities and women.  You can contact EXIM Bank directly to find out more about this initiative.

Expanding your business into new frontiers and accessing foreign markets can help you thrive in today’s global economy, and though accessing the funds necessary to do so can be difficult, it’s not impossible.  EXIM Bank helps entrepreneurs access the small business financing they need to take the next step in their success story.

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About the Author — Jennifer is a alum of the University of Denver. While in the graduate program there, she enjoyed spending time identifying ways in which non-profits and small businesses could develop into strong and profitable organizations that while promoting strong community growth. She also enjoys finding unique ways for freelancers and start-up businesses to reach and expand their goals.

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