What Is Export-Import Bank of United States (EXIM Bank)?
The Export-Import Bank of the United States (EXIM) is an official export credit agency of US. Congress created EXIM 80 years ago to help US businesses grow internationally. It's an independent agency of the federal government that finances small to medium US exporters by offering loans, credit guarantees and insurance.
- It sells insurance to foreign purchasers of American products.
- It grants loans to American firms to boost their exports.
- EXIM guarantees loans to private banks.
Through its numerous export financing programs, many small businesses and middle market companies can benefit in obtaining the capital they want to achieve.
How does Export-Import Bank of United States Work?
EXIM enables financing of US goods and services in international market and provides reimbursements in case if a foreign buyer is unable to pay. It. It has funding programs specifically designed for small and medium-sized enterprises that have just started out or wish to expand their selling to international market. EXIM works by minimizing the risks that exist in international trade. EXIM bank provides following programs:
- Pre-export financing
- Working capital Guarantees
- Export Credit insurance
- Loan guarantees
- Direct loans
With working capital guarantees program, you can arrange a loan from commercial bank assured by EXIM. These funds allow you to purchase raw materials, and equipment to comply with export sales order. EXIM has ability to grant generous advanced loans and funding for one year to up to three years.
The Advantages and Disadvantages of EXIM Bank
The Export-Import bank of United States comes with wide range of benefits. Some of the major advantages are:
- It makes international selling less risky.
- It allows US companies to convert export opportunities into real sales. This, in turn, will give rise to US jobs and thus lead to a stronger economy.
- EXIM provides export credit insurance which secures US exporters against non-payment risk by foreign investor for political or commercial reasons. It also extends credit terms to international importers which lead to enhanced sales and increase cash flow.
- It is reported that about 90% of EXIM transactions directly benefit small businesses of US. This implies that small exporters should apply more to such funding programs and employ the EXIM’s bank services.
- Clearly, the amount of reimbursement depends on number of factors and that must be carefully figure out by both parties - exporter and EXIM bank.
Who Qualifies for EXIM?
There is no assurance that every transaction will be financed by EXIM bank. Instead, they assume certain risks which mostly commercial lenders don't. The criteria to qualify for EXIM bank is that the exported product should have a minimum of 50% U.S. content and must not influence the U.S. economy negatively. It also allows financing for export of commodities, goods and services as much as they are not military related.
How to Apply for Financing at EXIM Bank?
Being a business owner, you can apply for such funding programs through a lending partner or at regional office of EXIM bank. Even, you can also apply via your own bank. Doesn't matter whether you need a loan too big or small, there is no such limitation to size of loan.