Glossary of Business Credit Terms

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EXIM Loan Guarantee

What Is EXIM Loan Guarantee?

EXIM Bank loan guarantees help ensure that international purchasers receive competitive financing. The guarantee allows international buyers to obtain competitive medium and long - term funding that previously could not be obtained from lenders.

How Does EXIM Loan Guarantee Work?

The bank will first look into the buyer’s credit history to determine if the business is reliable in paying back loans. Once this is done, loan guarantee will be offered for up to 10 years. The EXIM loan guarantee include coverage for long-term and medium-term loans which makes it suitable for small to medium businesses functioning in both public and private sectors.

The loan guarantee covers up 30 % local costs of goods and services being made within the United States. EXIM bank is known to provide 85% of the loan sought out by the buyer given that they meet the banks eligibility criteria. The loan is provided with 15% down payment by the buyer. Accrued interest and interest rates are included.

Advantages of EXIM Loan Guarantee

• Flexible, guaranteed loan financing options for U.S. purchasers of capital goods and related services.
• Risk reduction to a particular buyer for a transaction.
• Enter emerging markets safer. Longer terms and conditions of repayment.
• No transaction size limitations.
• 100% coverage of trade and political risks.

What Are the Qualifications for EXIM Loan Guarantee?

In most markets, EXIM can do business. However, in certain countries and under certain conditions, there may be limitations or unavailability to offer funding. Products should be shipped to a foreign buyer from the USA, as EX-IM only finances U.S. content. They cannot support military exports or defense products and services, and cannot support military buyers ' purchases. The export sales may, however, be financed with a loan guarantee from EXIM Bank, without a minimum or maximum limit. The EXIM will consider the economic impact and the environmental effects of a particular transaction and, consequently, its role in the review of its recent policies.

How to Obtain EXIM Loan Guarantee for My Business?

A Trade Finance Manager can explain the medium and long- term guarantees and assist in the application process which are suitable for business, given in the following ways:

1. Final Commitment (AP):
The process of application that generally facilitated their transactions, often becomes more familiar among commercial lenders. Where a lender is awarded with the support of EX-IM Bank to finance the transaction, a final commitment application (AP) can be submitted to EX-IM Bank.

2. Letter of Interest (LI):
The LI shall be handled within seven business days and may be renewed for six months. If this contract has not been awarded, a non - binding LI letter containing the EX-IM Bank Terms and Conditions for the specific transaction may be requested by a lender, a seller or a foreign borrower.

3. Preliminary Commitment (PC):
A PC is an EX-IM Bank commitment to ensure that the borrower's needs generally meet EX-IM Bank's financing requirements, as outlined in the application.

What Are the Costs Associated with EXIM Loan Guarantee?

There are further charges related to the loan guarantee EX-IM, $100 is the Letter of Interest processing fee, the preliminary commitment application fee is 0.1% of 1% of the financed amount, 0.125% is the commitment fee based on unused portions of the loan and the risk-based exposure fee. Apart from which interest rates are settled between the lenders and buyers.

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