Export Insurance & Risk Mitigation Best-Kept Secrets for Reducing Costs and Risks in Exporting December 11, :00 – 11:00 AM

Ex-Im Bank – Exports Through Jobs The official Export Credit Agency (ECA) of the U.S. Government Self-sustaining and independent  Established in 1934  Headquarters in D.C.  Eight regional offices We support sales of U.S.-made goods and services to create and maintain American jobs.

Ex-Im Bank Support Covers the Spectrum Pre-Export Financing Post-Export Financing Working Capital Guarantees Insurance Guarantees Direct Loans

Growing Export Sales and Minimizing Risks Extension of Credit Working Capital Guarantee Funds to Fulfill Orders Buyer Financing Medium- and Long-Term Insurance & Loan Guarantee Receivables Insurance Exporter NeedEx-Im Bank Solution

Ex-Im Bank FY 2011 Authorizations Loans$6,323 Guarantees19,400 Short Term Insurance (Bank-held): 250 policies 4,648 Short Term Insurance (Exporter-held) 2,600 policies 2,116 Medium Term Insurance 100 policies 239 TOTAL$32,727 In Millions of USD

Ex-Im Bank Support in Massachusetts

Trade Terms on the Risk Spectrum Seller Risk Trade Terms Buyer Risk High Low Low High Open Account Cash Against Document Usance / Deferred Letters of Credit Sight Letters of Credit Payment in Advance

What is Export Credit Insurance? Supply Contract Goods and/or Services Payment(s) on Credit Terms Claims Payment(s) Export Credit Insurance Policy Premium Collection(s) Policy Assignment U.S. Exporter Foreign Buyer Foreign A/R Financing

Exporter Benefits Expand Export Sales  Risk Mitigation  Competitiveness/Marketing  Extend Credit Terms to Buyers  Financing Tool  Ability to assign foreign receivables  Accelerate cash flow

Lender Benefits Assignment of policy proceeds  Expand relationship with exporting customers  Include export receivables in borrowing base  Improve effectiveness of working capital loans  Improve credit quality of loan  Compete effectively for new customers

Short-Term Export Credit Insurance Protects against non-payment by foreign buyers  Commercial Risks: insolvency and protracted default  Political Risks: currency inconvertibility; war, revolution, insurgency, expropriation; cancellation of import or export license  Coverage generally 95% Sell on competitive credit terms  Up to 180 days for consumable products, and to distributors  Up to 360 day terms for some bulk agricultural products, and to end users of capital equipment Obtain additional financing  Add insured foreign A/R to your borrowing base by assignment of policy proceeds (claim payments) to lender

Short-Term Policy Types Single Buyer  One policy per buyer Multi-Buyer*  Express  Small Business  Standard  Reasonable Spread of Risk (RSOR) * Premium discount of 25% available when combined with an Ex-Im or SBA export working capital loan

Pricing: Small Business Multi-Buyer Policy Term/ Type of Foreign Buyer Class I: Sovereign Class II: Bank Class III: Private Sight Letters of Credit$0.03 N/A S/DD/P; CAD$0.06$0.08$ Days$0.16$0.20$ Days$0.27$0.33$ $0.35$0.43$ days$0.43$0.54$ Days$0.53$0.65$1.77 Pricing per $100 of insured shipments

Pricing: Single Buyer Policy

Exporter Underwriting Standards - Operating history: 3 years with 1 year exporting - Industry - Projected markets and terms of sale - Product - Credit export experience - Aging, losses and prior credit insurance - Discretionary Credit Limits if applicable - Financial condition

Content No Defense Articles or Services, or Military Buyers  Exceptions possible for humanitarian purposes, drug interdiction, dual-use items U.S. Content  Short-term: each item must have more than 50% U.S. content  Services must be performed by U.S.- based personnel, either in the US or in the “host” country

Short-term U.S. Content Requirements Non-Small BusinessSmall Business ONLY Eligible Labor, Materials & Direct Overhead (excluding profit and indirect overhead) All costs (excluding profit) Origin of Goods Must be manufactured in the USMay be foreign-originated Thresholds< 50% US content = Ineligible< 50% US content = Cover only US Calculation of Support Item-by-item basis Option: Allowed to aggregate items on an invoice with the submission of a Content Report Evidence of Exportation All goods must be shipped from US

Country Country Eligibility  Support available in 170 countries  Restrictions may apply for political or economic reasons  Refer to the Country Limitation Schedule (CLS) at on the homepage under “Quick Start” or “Tools”

Creditworthy Buyers See Short-Term Credit Standards available on exim.gov Buyer Information  Up to $100k: credit report or trade reference  $100 to $300k: both, incl. some financial info  $300k+: additional trade reference, full financials

Underwriting Buyer Credit Limits - Buyer’s ability to generate positive cash flow from operations - Manageable leverage profile - Sufficient debt service coverage and liquidity - Buyer’s operating history - Ex-Im’s and exporter’s prior ledger experience with buyer, if any - Buyer’s character and corporate structure - Industry trends

Policy Assignments Standard Assignment  Lender is named loss payee  Allows exporter to borrow from lender against insured A/R  Only the exporter can file the claim  In event of buyer default and claim approval, Ex-Im pays claim proceeds to lender Enhanced Assignment  Exclusively for qualified small businesses – any policy type as long as exporter meets criteria  Adds exporter performance risk protection to lender  Lender must obtain specific documents  Lender can file a claim

On-Line Policy Management Web-based application and policy management system  All exporter insurance policies, accessible by brokers and lenders  Access all policy documents  Report export shipments and pay premium

Claims Report shipments on the correct buyer and pay premium Follow policy requirements for extending credit Documentation  Purchase Order, Invoice, Bill of Lading  Evidence of collection efforts  Other as specified in policy File claim within the Claims Filing Window: 3 to 8 months after due date

Prospective Applicants