EXIM working capital guarantees and export credit insurance

Working Capital Loan Guarantee. EXIM does not replace your bank. It guarantees 90% of a loan from a lender, which makes the lender more willing to lend against export orders and foreign receivables. You can use it to:

• pay for materials, equipment, supplies, labor and other inputs to fill export orders;
• buy finished products to export;
• post standby letters of credit used as bid bonds, performance bonds or payment guarantees.

It works as asset-based lending: how much you can borrow depends on your export-related inventory and receivables, at set advance rates, so you can borrow more against the same collateral than with an ordinary loan. It can be a revolving line or tied to one contract, and there is no minimum or maximum amount. Most guarantees are arranged by lenders with delegated authority from EXIM, which can close the loan without asking EXIM first. EXIM charges a guarantee fee, and the lender carries out field checks on the collateral.

Export credit insurance. After you agree credit terms with a foreign buyer, ship and invoice, you report the shipment to EXIM and pay a premium. If the buyer does not pay, EXIM pays. Policies cover up to 95% of the invoice, against commercial risks such as the buyer's bankruptcy and political risks such as war or a currency that cannot be exchanged. EXIM's multi-buyer policy for small businesses has no application fee and no minimum premium, needs a $500 deposit that is refunded, and sets the premium by the payment terms you give. Lenders are more willing to count insured foreign receivables in your borrowing base, so insurance and the loan guarantee are often used together.

The deadline: the law that sets up EXIM (12 U.S.C. 635f) lets it carry on its business only until the close of business on December 31, 2026. Unless Congress extends that date, EXIM can then manage the guarantees and policies it already has but cannot take on new ones.