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Providing Small and Medium Enterprises (SMEs) Customized, Uncomplicated Access to: -- Market expansion opportunities and -- Trade and investment financing.

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Presentation on theme: "Providing Small and Medium Enterprises (SMEs) Customized, Uncomplicated Access to: -- Market expansion opportunities and -- Trade and investment financing."— Presentation transcript:

1 Providing Small and Medium Enterprises (SMEs) Customized, Uncomplicated Access to: -- Market expansion opportunities and -- Trade and investment financing solutions

2 What is USGBS? U.S. Global Business Solutions (USGBS) is a suite of products and services from a group of U.S. government agencies to assist companies in growing their export business. As businesses grows, so do their needs for marketing assistance and trade financing. As a partner bank promoting the suite of USGBS products, your bank also should have opportunities for portfolio growth and increased profitability.

3 Trade finance is transactional; bankers prefer relationships. U.S. government programs can bridge that gap by combining products that provide comprehensive business solutions, strengthening the customer relationship. Problem Solution Objective: Expand Small Business Access to Trade Financing

4 Strategy Tailor the options to the stage of exporter development and capacity of the financial institution or service provider Combine key trade and commercial finance products and services in a single menu of options made for mainstream use: U.S. Global Business Solutions Offer a seamless, low-cost transition among options Provide a menu of customized financing solutions for more advanced exporter needs: The Specialized Global Solutions (SGS) program

5 Lender Benefits Increased traffic of prospects to the bank (via marketing campaign/collateral distribution) By formalizing the bank’s commitment to a full range of export trade finance and services, it is easier for account officers to ask the “do you export?” question to existing customers Shortens the sales cycle by making the customer’s education more streamlined and access to USG services more direct Greater customer retention (why go elsewhere if your bank can provide access to a whole suite of export business solutions?)

6 U.S. Government Help for U.S. Exporters Trade ServicesTrade Finance International Trade SpecialistsTrade Finance Specialists 108 Offices across the U.S. American embassies and consulates in more than 70 countries 40 Trade Finance Specialists in 22 locations Trade ServicesTrade Finance Programs Export Business Counseling Foreign Market Research and Buyer Intelligence Finding Foreign Buyers Meeting with Visiting Foreign Buyers Trade Shows and Trade Missions Purchase Order Financing General Export Expenses Receivables and Inventory Financing Country and Buyer Credit Insurance Equipment and Real Estate Financing


8 Needs of an Early Stage Exporter Trade Counseling (CS) Guides export-ready U.S. companies through the export process from beginning to end, helping to develop an effective international sales strategy, identify and comply with laws and regulations, fulfill documentation requirements, and overcome trade problems. International Buyer Program (CS) Provides export counseling to U.S. companies and connects them with pre-screened potential buyers, sales representatives, and business partners at major U.S. International Buyer Program-designated domestic industry trade shows. International Partner Search (CS) Provides U.S. companies with a report that helps determine the marketability of their products or services, identifies pre-screened potential export partners, and includes detailed overseas company information. Reverse Trade Missions (USTDA) Organizes visits to the United States for foreign delegates to observe the design, manufacture, demonstration, and operation of U.S. goods and services that may help them achieve their development goals. Trade Missions or Trade Shows (CS) Enables U.S. companies to exhibit products at overseas Certified Trade Fairs or participate in US- organized trade missions, receive customized market briefings, and meet potential business partners. Express Insurance (Ex-Im) Covers non-payment risks, allowing firms to extend competitive credit terms to foreign buyers and increase cash flows. Coverage is up to 95% of invoiced amount of foreign receivable. Export Express (SBA) Finances the exports of new exporters and businesses that are expanding their current foreign markets. Up to $500k, 75-90% guarantee, 25 year max. term financing for any export development activity, including trade show attendance, equipment and export sales; 7 year max. term for working capital. Under a general line of credit, 30% of the line can be used to support domestic activity. CapLines (SBA) Provides businesses with a line of credit that supports both domestic and foreign sales cycles (including insured foreign A/R) and cyclical working capital needs.

9 Needs of Experienced Exporters Gold Key (CS) Organizes one-on-one meetings with pre-screened potential buyers, sales representatives, and business partners when visiting overseas markets or at overseas trade shows. International Company Profiles (CS) To assess potential export partners, these reports contain available sales, profit figures, potential liabilities, and other financial information, and are prepared by trade professionals working in target markets. Trade Credit Insurance (Ex-Im) Covers non-payment risks, allowing firms to extend competitive credit terms to foreign buyers and increase cash flows. Coverage is up to 95% of invoiced amount of foreign receivable. Global Credit Express (Ex-Im) Provides businesses with short-term, direct working capital loans of up to $500,000. Six or twelve month revolving line of credit that supports general expenses of exporting as well as the full range of working capital needs Export Working Capital (SBA) Transactional or asset-based lines of credit up to $5MM with 90% guarantee, typically for a 1 year term with 3 year maximum maturity, to support export transactions from purchase order to collections. CapLines (SBA) Provides businesses with a line of credit that supports both domestic and foreign sales cycles (including insured foreign A/R), and cyclical working capital needs. International Trade Loan (SBA) Insourcing or expanding facilities for firms growing their exports or adversely impacted by imports. Up to $5MM with 90% guarantee; maximum maturities of 10 years for working capital or 25 years for real estate. Bid/Performance Bonding (SBA) Provides a guarantee of performance under contracts with foreign buyers or guarantee on advance payments, currently through the use of standby letters of credit which both the Export Express and Export Working Capital loan programs can support.

10 Trade Counseling Trade specialists available in 108 U.S. offices and American embassies and consulates in more than 70 countries. Identifies key global markets for specific products or services; advises on import/export regulations and licensing requirements. KEY: Can connect U.S. companies to partners in foreign countries. Provides high-quality market research for the U.S. exporter, saving valuable time and money.

11 International Buyer Program KEY: Finding the right partner as a buyer, representative, or distributor without leaving the country. Brings thousands of international buyers to major industry trade shows in the United States for business- to-business matchmaking with U.S. exhibitors. At the Show: an International Business Center, pre- arranged meetings, trade counseling, global markets briefings.

12 International Partner Search U.S. company provides product literature and trade specialists utilize a wide network of global contacts to interview potential partners. Obtain high-quality market information for the U.S. exporter, saving valuable time and money. Normally in 30 days, U.S. exporter receives information on the key officers, size of company, sales, years in business, number of employees, and a statement from the prospective partner about the market potential for the Exporter’s product.

13 13 Reverse Trade Missions Bring key officials to the U.S., pending their upcoming procurement, to observe the design, manufacture, demonstration and operation of U.S. products and services that can help them achieve their development goals. Offer opportunities for U.S. businesses to establish or enhance relationships with prospective overseas customers, understand their development goals, and highlight their firm’s technologies, products and services. Example: Recently, Africa Agribusiness RTMs generated over $13 million in exports, visiting Nebraska, North Dakota, Minnesota, Iowa, Utah, Idaho and Missouri.

14 Gold Key Matching Service Helps exporters of U.S.– made goods and services by arranging one-on-one appointments with pre-screened business contacts in a targeted, export market. Trade specialists provide industry and market briefings, market research, post-meeting debriefing and follow-up strategies. Help is available with travel, accommodations, interpreters, and clerical support.

15 Trade Missions/Trade Shows Overseas events that are planned, organized, recruited, and led by private and public sector export-oriented groups and organizations. Bring U.S. companies into contact with potential agents, distributors, joint venture partners, licensees, local businesses and government contacts. Provide one-on-one meetings, market briefings, networking receptions. Follow-up trade counseling with trade specialists in 108 U.S. offices.

16 International Company Profiles Provide quick credit checks and due diligence reports on foreign buyers and distributors. U.S. exporter gets complete contact information on key officers of the company, along with information on company’s size, sales, years in business, number of employees, other financial data, product lines represented, and bank and trade references. Satisfies the credit report requirement(s) of trade credit insurers and banks/lenders on foreign receivables.

17 Express Trade Credit Insurance Risk Mitigation Tool: Insure foreign receivables against non- payment due to commercial and political risks Marketing Tool: Exporters can extend competitive credit terms to foreign buyers to increase sales Financing Aid: Add previously ineligible foreign receivables into the borrowing base as additional collateral

18 Express Trade Credit Insurance Trade credit insurance protects U.S. companies who export on credit terms from buyer defaults due to bankruptcy, insolvency, war, revolution, civil disturbances, foreign government’s cancellation of import licenses, and currency inconvertibility. Express Insurance: for small businesses only; 95% coverage, 5- day turnaround for one-year policy quote, 10 – 15 days to approve named Buyers, up to 20 Buyers per policy. To Qualify: be a small business as defined by the Small Business Administration; three years’ operating history; a DUNS# (866.705.5711); some exporting experience, or an export plan with Buyers identified, and ready-to-export in 60 days. 50%+ U.S. content of exports is required. A 25% discount is available if paired with a USGBS loan.

19 Export Express Loan guarantee of 90% for a $350,000 loan/line of credit, and 75% on higher amounts to a maximum of $500,000. Government guarantee gives banks/lenders an incentive to make loans for general export activities, including: – 1) export development including participation in a foreign trade show or translation services, – 2) export transactions, including export purchase orders and foreign accounts receivables; – 3) issuance of standby letters of credit that serve as performance bonds, completion bonds, and advance payment guarantees, and – 4) fixed assets for equipment or real estate. Maximum loan terms: for revolving lines of credit: 7 years; for equipment: 10 years or useful life; for fixed assets, including real estate: 25 years.

20 Global Credit Express Provides short-term working capital direct to creditworthy small business exporters in a 6-month to 12-month revolving line of credit up to $500,000 maximum. May be used to finance general export activity, or specific export transactions. Is fixed-rate finance from the U.S. Government. Borrower pays an Origination Fee, legal costs and an Exposure Fee to the Export-Import Bank of the U.S., all of which may be financed by the loan. Eligibility: be a small business, have three years’ revenue producing operations, and be recommended by an Lender.

21 Export Working Capital Program - EWCP 90% guarantee on loans/lines of credit up to $5,000,000 targeted to small businesses who can generate export sales and need additional working capital. Manufacturers (<500 employees), wholesalers (<100 employees), export trading companies, services companies are eligible, or alternatively: a firm with less than an average of $5 million in net income of the past two years and a net worth less than $15 million. Must be used for export transactions only, including 100% of exporter’s costs of the transaction from purchase order to collections Can be structured to fund single or multiple transactions or established as an asset-based line of credit with advances against a borrowing base of export inventory and foreign accounts receivable.

22 CAPLine Working Capital Line of Credit Loan guarantee for 85% on lines of credit up to $150,000, and 75% of higher amounts up to $5,000,000. Small businesses may use the lines to provide credit terms to customers and to finance inventory. Small business borrowers can pledge both domestic and foreign accounts receivable and inventory. Foreign accounts receivable must be covered by credit insurance. Guarantee is available for manufacturers, wholesalers, export trading companies, and service providers.

23 International Trade Loan A loan guarantee for 90% of a loan up to $5,000,000 that a U.S. Exporter obtains to acquire, construct, renovate, modernize, improve, or expand facilities and equipment in the United States to produce goods or services involved in international trade. May also be used by a U.S. company that has been adversely affected by competition from imports. Maximum term: ten years for working capital; 25 years for real estate acquisition. Eligible borrowers are in a position to expand existing export markets or develop new ones.

24 Bid & Performance Bonds; Advance Payment Guarantees Standby letters of credit issued by a commercial bank can serve as a performance or bid bond or as an advance payment guaranty. Funding support for Standby Letters of Credit can be provided by the following guaranty loan programs: Export Express Export Working Capital Guarantee – EWCP Working Capital Guarantee Program The guarantee serves as an incentive to the bank to issue the standby letter of credit with less than full, 100% cash collateral.

25 Indirect Exports Note: All USGBS loans can support “indirect exports.” Indirect exports occur when the borrower ships a product to another domestic company that in turn incorporates it into a final product for export or to an export trading company that exports it directly. Documentation must be provided by the exporter-of-record to the lender that the borrower’s product is, in fact, being exported.

26 Specialized Global Solutions Agricultural and Forest Products USDA’s Export Credit Guarantee Program (GSM-102) guarantees credit extended by the U.S. private banking sector to approved foreign banks to encourage financing of commercial exports of U.S. agricultural products. Feasibility StudiesUSTDA Feasibility Studies link foreign project sponsors with U.S. businesses at the early stage of project development when technology options and requirements are being defined. These studies evaluate the technical, financial, environmental and other critical aspects of infrastructure development projects. Credit & Political Risk Insurance Ex-Im’s Short-Term Credit Insurance protects against the buyer’s failure to pay for the U.S. made goods and services allowing exporters to extend open account credit terms to increase sales.

27 Specialized Global Solutions Medium-Term programsEx-Im’s Medium-Term programs support the sale of capital equipment and/or related services to a single foreign buyer by insuring (or, for lenders only, guaranteeing) the transaction against the buyer's failure to pay due to unforeseen commercial or political reasons. Export Working Capital Guarantee Working Capital Guarantee provides commercial lenders with a 90% loan guarantee to facilitate multiple export sales or individual contracts for goods or services Foreign Direct Investment Assistance OPIC provides financial products, such as loans and guaranties; political risk insurance; and support for investment funds, all of which help American businesses expand into emerging markets.

28 SGS: Export Credit Guarantee Program Protects U.S. exporters or U.S. banks/lenders from default on letters of credit issued by foreign banks covering the import of U.S. agricultural products. 98% of principal and a portion of interest are guaranteed to the bank/lender. Buyer in foreign country receives extended terms; U.S. exporter receives cash at shipment from L/C confirming bank. Normal terms 30 days – two years. 190 agricultural products eligible

29 SGS: Feasibility Studies Funding U.S. government funds are available for priority development projects in emerging economies, where the U.S. export potential is a multiple of the funding costs, where follow-on financing appears feasible, and where U.S. companies may face strong competition from other supplier countries. U.S companies assist foreign emerging economies to identify development projects, analyze investment needs, build trade capacity, and develop specific economic sectors via feasibility studies, pilot projects and technical assistance.

30 SBS: Short-Term Trade Credit Insurance A U.S. government insurance policy that protects U.S. exporters who can increase export sales by offering credit terms to foreign buyers. Exporters are protected from buyer defaults due to bankruptcy, insolvency, protracted default, war, revolution, political violence, cancellation of import licenses, and currency inconvertibility with the U.S. dollar. Policies can be written: For one buyer/country at a time For a global portfolio of buyers For a global portfolio with some buyers de-selected Small businesses pay no first-loss deductible Claims can be made on the policy 90 days after buyer defaults Bankers may require the insurance for their loans to U.S. exporters. A 25% discount is available if paired with a USGBS loan.

31 SBS: Medium-Term Transactions Guarantee of a loan for a typical term of one to five years to a foreign buyer of U.S. capital goods and services. No limit. For loans up to $10,000,000, an alternative insurance policy is available to exporter or lender, with faster approval, less documentation. Requires cash down payment to the exporter of 15%. Loan for up to 85% of the transaction is guaranteed to bank/lender at 100% of principal and interest. Banking, legal, engineering fees, and local costs may be financed in the loan. Eligible borrower/foreign buyers must provide audited financial statements, credit reports, bank references in the application.

32 SBS: Working Capital Guarantee Program Guarantee of 90% of a loan to U.S. exports to finance a specific export transaction or recurring export sales. No limit on amount. Loan finances the pre-export costs of manufacturing and the post-export carrying of eligible foreign accounts receivable. Loan is asset-based, requiring a monthly report (“borrowing base”) of eligible inventory and eligible accounts receivable, with guaranteed advance rates of 75% and 90%, respectively.

33 SBS: U.S. Foreign Direct Investment U.S. government insurance of U.S. businesses’ risk of loss on their investments in emerging markets due to war, civil strife, coups, politically-motivated violence, terrorism, expropriation, currency inconvertibility. $100,000 - $250,000,000 for U.S. investors holding at least 25% of the investment; up to 20-year tenor. Loans or guaranties available between $350,000 and $250,000,000 for capital costs like design/engineering services, facility construction or leasehold improvements, and equipment. Support for the creation of privately-owned and managed investment funds in developing countries.

34 U.S. Global Business Solutions An opportunity for federal agencies to: – Collaborate in reducing the complexity of their programs – By allowing market expansion and financing solutions to be customized to meet specific exporter needs – In partnership with lenders to expand SME export sales An opportunity for lenders to: – Expand their portfolio of exporting clients—the most dynamic type of businesses in today’s economy – Provide better service to their existing customers by offering comprehensive solutions for their expansion needs – Partner with the federal government on a national goal to increase exporting, create jobs, and reduce the U.S. trade deficit – Access one point of contact for follow-up assistance

35 For Assistance U.S. GBS product specialists are ready to assist you in assessing the needs of your clients and prospects. The main points of contact for your bank are: ______________________________ ______________________________

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