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The Resurgence of EXIM Bank

What is EXIM Bank?

EXIM Bank is the official export credit agency of the United States. EXIM’s mission is to support US jobs by facilitating the export of US goods and services to other countries. EXIM Bank fulfills this mission by delivering risk mitigation tools such as trade credit and political risk insurance and loan guarantee programs.

What services does EXIM Bank Provide?

EXIM Bank’s export trade credit insurance services are especially targeted toward small businesses. This product insures the risk of non-payment from foreign buyers, enabling US companies to stay competitive while securely selling their products overseas. Uniquely, EXIM Bank’s insurance products allow US businesses to report and pay premiums on actual sales activities rather than on future sales projections, giving customers a pay-as-you-go feature. In addition, the programs typically have zero to low deductibles.

Loan Guarantee Program

EXIM Bank’s loan guarantee programs include working capital solutions as well as medium and long-term guarantees intended for capital goods. The working capital program provides lenders with a loan guarantee to facilitate loans against certain foreign receivables and inventory and is primarily targeted at US lenders to entice them to expand working capital availability for US exporters.

Medium and Long-Term Loan Guarantee Program

EXIM Bank’s medium and long-term loan guarantee programs are designed to support large ticket capital goods and effectively provide the lender with a loan guarantee to mitigate the risk of non-payment from the foreign buyer. Many of these programs support large corporate profile clients; however, this program also provides significant support for small business exports as well as suppliers who supply products and services into these supply chains.

The Bottom Line

As part of EXIM Bank’s mission, they fill gaps left by the private sector when the private sector is unable or unwilling to provide insurance and/or lending solutions that companies need. These gaps happen for a variety of reasons but the primary reasons are due to economic contractions and the increased risks associated with overseas collateral.

EXIM Bank is a vital component to the US trade finance system and its good to see the institution back in action and ramping up to help US exporters compete globally.

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