AIM Quarterly SeminarEXIM BANK FINANCING

September 25, 2007

Ex-Im Bank•Ex-Im Bank is an independent U.S. agency. Mission is to support export of US manufactured goods & services, and create & sustain US jobs

•Established in 1934, Headquartered in DC with 5 regional business development offices (New York, Miami, Chicago, Houston, Long Beach)

•Most clients are small businesses main products are:– Working capital (Pre-Export Shipment)

– Credit Insurance (Post Export Shipment) • Short- term Insurance

– Single buyer – Multiple buyer policies

• Medium-term Insurance or Guarantees• Long-term Direct Loans• Special Policies

» Small Business » Environmental » Services » Leases

• Used by small & medium-size U.S. firms to fulfill international orders.

• Ex-Im gives guarantee to lending banks who in turn provides working capital loans to U.S. exporters.

• Funds must be used to make or buy U.S. goods and services (raw materials, equipment, labor) to fulfill export orders.

• AND/OR to finance export receivables by posting performance bonds (stand-by L/C’s)

• Exports must be shipped from U.S. and goods must have at least 50% content, services must be performed by US staff.

• If content is less say 45% -loans can only be supported up to 45%.

Working Capital

• Loans can be “transaction-specific” or “revolving”

• No minimum or maximum amount

• Exporter’s financial statements must support size of loan requested

• Inventory & accounts receivable (L/C’s or insured receivables) are used as collateral

• Advance loan amounts as high as

– 75% on inventory

– 90% on eligible receivables

Working Capital

• Ex-Im offers 90% guarantee to lender including principal & interest (100% if woman/minority-owned).

• Application Fee is $100 for a final commitment.

• Ex-Im fee to lender is up to 1.5% of the loan total; lending bank may pass the fee on to the exporter

• Interest rate negotiated by exporter & lender. Most loans are one year but can be up to three.

• Owner(s) with more than 20% equity must pledge a personal guarantee

Working Capital

How to Apply:• Preliminary Commitment Application: Call Sharyn Koenig

(212) 809-2653

• Delegated Authority Lender list go to: www.exim.gov view Lender Locater or Lender Referral List

• Ex-Im “delegated lenders” can approve loan by their loan committee and attach Ex-Im Bank’s guarantee without prior approval

• Lender “Additional Requirements”: No “deep pockets”-Why is Ex-Im needed for financing to materialize?

• Smaller loans available through SBA: Call 1-800.U.ASK.SBA or visit www.sba.gov.

Working Capital

WCG Increases Borrowing Power

Credit InsuranceRisk Protection: •Protects balance sheet against risks of foreign buyer non-payment

•Policies can cover a single sale or your entire export portfolio

•Covers both commercial risk-Insolvency, bankruptcy, protracted default and political risk-War, revolution, insurrection, civil unrest, “transfer risk”

Risks Not Covered•Disputes, unless/until they are resolved•Cancellation of a sales contract•Devaluation of a currency as a political risk- If a default occurs, and buyer asserts it was due to government devaluation of the currency, it is viewed as commercial loss not political loss.

Benefits to Exporters•Increase competitiveness

• Able to offer buyer-friendly terms- open account to global buyers • Flexible terms helps you secure more global sales

•Ensures a greater, more stable, cash flow. • Banks prefer to lend against Ex-Im backed receivables • You can budget premium costs - avoid catastrophic loss

Credit InsuranceFew Restrictions•Military Exports :No Defense Articles or Services

3 Exceptions:1.Humanitarian aid 2.Drug interdiction 3.Dual use items

•Restricted Countries (political or economic)Ex-Im help is available in many countries but some political/economic restrictions apply. Check the Country Limitation Schedule (CLS) at www.exim.gov X means not available

•Foreign Content Goods must be produced in and shipped from US. Services performed by US-based personnel. ST, at least 51% US content, incl. labor but not mark-up MT, at least 85% US content, incl. labor not mark-up

•Buyer’s Creditworthiness (more later!)

How to Apply • Ex-Im Bank regional offices and registered insurance brokers can

help

• Insurance brokers can assist with documentation and provide required information to Ex-Im Bank

• Go to www.exim.gov click on Insurance Brokers to find a list of EXIM registered providers of credit risk insurance

Credit Insurance

Policy by Buyer Type

1. Small Business Multi-Buyer Basis

2. Small business single-Buyer Basis

3. Multi Buyer Basis

4. Single-Buyer Basis

Policy By Term Type

1. Short-Term Policies (up to 180 or 360 day terms)

2. Medium-Term Policies (capital equipment / 1-5 year terms)

Other: Special Policies1. Small Business 2. Environmental 3. Services 4. Leases

How To Access Ex-Im Products• Banks

– Lender Locater Lender Referral List

• Working Capital Program– Lenders with delegated Authority

• Credit Risk Insurance – Insurance Brokers

• Ex-Im Bank Regional Office– Sharyn Koenig, Sr. Bus. Dev. Officer VA Region Tel: (212) 809-2653 sharyn.koenig@exim.gov