Glossary of Business Credit Terms

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

EXIM Finance Lease Guarantee

What Is EXIM Finance Lease Guarantee?

The purpose of the EXIM Finance Lease Guarantee is to provide leasing financing to creditworthy international leases, whether private or public, of the United States goods and services if otherwise the funding is not available, or if the interest rates applicable are not economically feasible.

How does EXIM Finance Lease Guarantee Work?

In addition to financing structured as installment loans, EXIM provides support to competitive medium-term financing structured as financial leases. The promotion of leasing financing is important because some foreign buyers of US capital goods prefer lease financing as a substitute to traditional installation loans.

Advantages and Disadvantages of EXIM Finance Lease Guarantee

Advantages

  • The total amount is less than 85% of the contract value or current US content amount
  • Allows international lenders to obtain financial leases from lessors
  • Flexible funding options and reimbursement terms
  • Transaction size up to $10 million (excluding exposure fee)

Disadvantages

  • Loss of Moratorium Period.
  • The risk of being deprived of the use of property.
  • No change of property.
  • Losing ownership Incentives.
  • Termination of lease penalties.
  • Loss of resource value of property.


What are the Qualifications for EXIM Finance Lease Guarantee?

Generally, EXIM guarantees lease of equipment and related services from the US. Funding can also be provided for renovated machinery, software, certain banking and legal fees, as well as certain local costs and expenses. However, not for transactions involving military items, where certain exceptions apply. EXIM bank's foreign contents requirements may be met in the majority of markets where the goods eligible for the EXIM funding must meet EXIM's foreign contents requirements. However, in certain countries and under certain terms, the bank may be limited or unable to offer financial support. EXIM will take into account the economic and environmental impacts of a specific transaction before approving certain transactions.

How to Obtain EX-IM Finance Lease Guarantee for My Business?

The applicant must present a copy of the leasing agreement form, together with a legal opinion on certain matters within the relevant jurisdiction, to receive EXIM approval of the lease agreement. If EXIM approves the leasing agreement form for use with Master Lease Guarantee Agreement (MGA) within a particular country, the lease agreement form may be used for up to three years without further review by EXIM for further lease guarantees in that country.


What are the Costs Associated with EX-IM Finance Lease Guarantees?

The costs associated with EX-IM Finance Lease Guarantee include three kinds of costs; The application processing fee in the Letter of Interest which is $100 and $ 50 online. The Commitment fee is by far 0,125% annually on the non-paying balance in the guaranteed financial lease portion, along with EXIM Exposure Fee which depends on the tenor, country risk, and credit risk of the buyer.

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