1. Global Trade Solutions International Payment & Finance Methods
October 28, 2011
Norfolk, Virginia

2. Products and Services for Exporters
Agenda
Products and Services for Exporters
Risk Comparison – International Methods of Payment
Documentary Collections
Letter of Credit
Trade Financing
SBA
EXIM Bank
Export Credit Insured Accounts Receivable
Highlight for the client/prospect, what you are going to review during today’s presentation.
Ask if there are any specific topics they would like to discuss.

3. International Trade Products
Products and Services
International Trade Products
Trade Services
Commercial Letters of Credit - Import & Export
Standby Letters of Credit
Documentary Collections
Export Credit Insurance
International Correspondent Banking
Trade Finance
Working Capital Loans for exports
Foreign Receivable Financing
Foreign Buyer Financing
Overseas Investment Financing

4. INTERNATIONAL METHODS OF PAYMENT
Risk Comparison
INTERNATIONAL METHODS OF PAYMENT
Trade Terms
Exporter Risk
Importer Risk
Open Account
Documentary Collection(Time)
Documentary Collection (Sight)
Letters of Credit (Time)
Letters of Credit (Sight)
Cash in Advance
High
Low

5. International Methods of Payment
Getting Paid and Managing Risk

6. International Methods of Payment
Documentary Collections
Draft or Documents Against Payment Or Acceptance
Time of Payment: SIGHT at time of presentation of the draft
Time of Payment: TIME at a future date.
Goods available to Buyer: after payment if ALL Ocean Bills of Lading are included with the documents and after the cargo has arrived.
Risk to Seller: possible non-payment of the draft.
Risk to Buyer: has assurance of shipment, but Seller may not ship goods as ordered. Must pay to get title to goods.
Not recommended for sales on extended terms

7. International Methods of Payment
Documentary Collections
Benefits
More secure than Open Account
Goods available to Buyer: after payment if ALL Ocean Bills of Lading are included with the documents and after the cargo has arrived.
Risk to Seller: possible non-payment of the draft.
Risk to Buyer: has assurance of shipment, but Seller may not ship goods as ordered. Must pay to get title to goods.
Don’t encumber Buyer’s line of credit
Inexpensive

8. International Methods of Payment
What is a Letter of Credit?
A payment instrument issued by a bank on behalf of its customer.
The issuing bank substitutes its own credit standing for that of its customer.
The issuing bank undertakes to pay for the goods or services provided by the beneficiary of the LC; the beneficiary looks to the bank for payment, instead of the buyer (applicant of the LC).
The LC assures the beneficiary (exporter) of payment when the terms of the credit are met.
The exporter is not obligated to perform if the terms of the LC are not acceptable.
Commercial letter of credit can be paid “at sight” or at period in future
Time Letter of Credit can be discounted if seller doesn’t want to wait until LC maturity. Simple form of trade finance.

9. Letters of Credit Benefits More secure than Open Account
Foreign Bank promises to pay exporter if documents are in compliance with letter of credit
Goods available to Buyer: after payment if all Ocean Bills of Lading are included with the documents and after the cargo has arrived.
Risk to Seller: LC void if seller docs are not in compliance, i.e. have discrepancies
Risk to Buyer: has assurance of shipment, but Seller may not ship goods as ordered. Must pay to get title to goods.
Versatile– can build in terms for buyer and still have assurance of payment from overseas bank

10. International Trade Finance
TRADE FINANCE TOOLS
These traditional payment methods are fine, but what if your customer wants extended terms of payment or your competitors are offering better terms? You need financing to put the order together?
Trade Finance may be the solution to your customer’s needs and the way to make exports a manageable part of your growth strategy.
SBA Export Express
SBA Export Working Capital Program
EXIM Bank Working Capital Program
Insured Foreign Receivables Financing
Both SBA and EXIM assists US exporters to obtain loans to produce goods or services for export. They guarantee repayment to the lender, making it possible for banks to extend financing to the exporter. They do not compete with commercial lenders, but assumes the risks they cannot accept.
SunTrust Bank is a delegated lender for both SBA and EXIM Bank Programs

11. International Trade Finance
SBA’s Export Express Working Capital Guarantee Program
The program supports single transactions or multiple sales under a revolving line
Maximum loan amount limited to $500,000
Guarantees 90 percent of a commercial bank loan up to $350,000 and 75 percent from $350,000-$500,000
Program minimizes government mandated forms. Streamlines processing and costs of smaller SBA loans for exporters
VERSATILE -- Can be used for working capital, issue standby letters of credit for advance payment guarantees, participation in foreign trade shows, or translation of product literature for use in foreign markets

12. International Trade Finance
SBA’s Export Working Capital Guarantee Program
The program supports single transactions or multiple sales under a revolving line
Guarantees 90 percent of a commercial bank loan up to $5,000,000
Can be used to purchase goods and services or pay for labor & materials to put together an export order– Pre Export Financing
Can be used to support standby letters of credit for performance bonds or advance payment guarantee
At the minimum, loan must be collateralized by export- related AR and inventory
No US content requirement or military sales restrictions

13. International Trade Finance
FEES and RATES
Guarantee Fee:
Maturities of 12 months or less = 1/4 percent
Maturities greater than 12 months = % depending on loan size
Interest Rates/Lender Fees are Negotiable
ELIGIBILITY
A business must meet SBA’s industry size standards and have been in business for at least 12 continuous months
SunTrust Bank is a delegated lender for SBA’s Export Working Capital Guarantee Program
One of few banks in country to be awarded this designation

14. International Trade Finance
Export Import Bank of the US Export Working Capital Guarantee Program
The program covers 90% of the loan’s principal and accrued interest
STB minimum loan request is negotiable – there is no maximum amount
At the minimum, loan must be collateralized by export-related AR and inventory
Goods must have at least 50% US cost content to guarantee the entire transaction
Loans Can Be either Transaction Specific or Revolving
High Advance Rates on Inventory and Receivables, including work in Process .
Some restrictions to the program (military exports and some countries are excluded)
Financing Provided for Short, Medium, and Long Term

15. International Trade Finance
Export Credit Insurance & Insured Foreign Receivables Financing
Insurance Available through EXIM Bank and Private Sector Insurers
Commercial risk insurance (buyer bankruptcy and insolvency)
Political risk (war, inconvertibility of currency)
Short Term & Medium Term Insurance Policies, Multi Buyer or Single Buyer Policies
Enables US exporters to extend “open account” terms to international buyers
(protect US exporters against foreign buyer default)
Insured export receivables looked upon favorably by banks. Exporters may be able to borrow against insured foreign A/R.
Good option for service companies who have little inventory for collateral

16. Contact: Marsha Sompayrac Director, Global Trade Solutions 919 E
Contact: Marsha Sompayrac Director, Global Trade Solutions 919 E. Main Street, 2nd Floor SunTrust Bank Richmond, VA Tel: Suntrust.com Hai-nah Ellison Vice President, Global Trade Solutions 919 E. Main Street, 2nd Floor SunTrust Bank Richmond, VA Tel: Suntrust.com