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Ex-Im Bank
Ex-Im Bank:
NTC Webinar
August 13, 2014
Who We Are — What We Do
Mission: Support US exports in order to create and
sustain US jobs
Ex-Im Bank is an independent ag...
Ex-Im Bank Regional Offices
Small Business IS Our Business
88% of all Ex-Im Bank transactions supported small
business exports! ($4.4 billion authoriz...
Foreign Export Credit Agencies
EDC Canada
ECGD UK
Coface France
EulerHermes Germany
JBIC Japan
Sace Italy
KEIC, Keximbank ...
Who can we help…?
Full range of ‘’exporters”
 Manufacturers,
Service providers,
Wholesalers & Distributors,
Trading co...
Eligibility Criteria
Country Eligibility
 Support available in over 155 countries
 Restrictions may apply for political ...
How We Help Increase Your Export Sales
Minimize risks
Provide a Marketing Advantage
Supplement commercial financing
Ex-Im Bank Support Covers the Spectrum
Pre-Export
Financing
Post-Export
Financing
Working Capital
Guarantees
Insurance
Gua...
Pre-Export Financing:
Working Capital
Guarantee Program
Working Capital Guarantee
 Assists small and mid-size companies in obtaining working
capital to produce or purchase US go...
WCG Increases Borrowing Power
Post-Export Financing:
Short-Term
Export Credit Insurance
Short-Term Export Credit Insurance
Allows exporters to offer competitive credit terms
to foreign buyers
 Generally up to ...
Risks Covered
Commercial Risks
 Insolvency
 Bankruptcy
 Protracted default
Political Risks
 Transfer risk
 War, revol...
Single-Buyer, Single Country
Small Business Multi-buyer
Small Business Multi-buyer – Express Insurance
Standard Multi-buye...
Buyer Credit Limits
For both Small Business and Standard Multi-Buyer
policies, a Discretionary Credit Limit (DCL) may be
g...
Special Buyer Credit Limit – SBCL’s
(A) Up to $100,000:
▪ Your credit history with the buyer for the last three years, or ...
Post-Export Financing Solutions:
... When a Foreign Buyer
Needs Term Financing
Medium-Term Insurance and Guarantees
Capital equipment sales and related services
Lease transactions
 Finance Lease: Guar...
 Minimum 15% down payment required (may be
financed by the lender)
 100% coverage on the remaining 85% financed portion
...
Standard Finance Model
Net Contract Price: US $1,000,000
Less: 15% Down payment: 150,000
Financed Portion: 850,000
Plus: E...
Ex-Im Bank OnLine
Our web-based application and transaction
management system makes it easier for exporters
and lenders to...
Eligibility Criteria
No Defense Articles or Services, or Military Buyers
 Exceptions may be made for humanitarian purpose...
Who can we help…?
Full range of ‘’exporters”
 Manufacturers,
Service providers,
Wholesalers & Distributors,
Trading co...
Thank You!
Kelly Kemp
Export-Import Bank of the US
North Texas Branch
c/o McKinney Chamber of Commerce
2150 S Central Expr...
Ex-Im Bank
Case Study: David Ickert
Air Tractor
•Air Tractor, Inc. manufactures ag airplanes & forestry fire fighting aircraft.
•Small business (260 employees) (100% owne...
•In 1995, founder Leland Snow wanted a growth strategy focused on
increased exports
•Could not be done without more favora...
•Discovered the Export-Import Bank
•Ex-Im Bank Medium Term Insurance program fit Air Tractor needs in the
foreign marketpl...
Foreign Customer
Air Tractor extends credit
to foreign customer
U.S. Commercial
Bank
ATI purchases credit
insurance
Ex-Im ...
•Export Import Bank Medium Term Credit Insurance Program
•Facilitates medium term (5-7 years) financing on aircraft for cu...
•Air Tractor responsibilities using Ex-Im Medium Term Insurance
•Underwriting
•Know Your Customer
•Primary point of contac...
•Excellent history with Ex-Im Bank
•Have used Ex-Im Bank Medium Term Insurance program for 20 years
•Over 200 transactions...
•₁Foreign ECA’s are rapidly increasing their support for their own exporters
•EIU found top 9 ECA’s provided $488 billion ...
In Summation
•Air Tractor has no alternative to Ex-Im Bank
•Commercial banks will not lend to our end user customer
•25% o...
Ex-Im is a small business issue and a Main Street issue.
Ex-Im Bank is NOT the easy way, it’s the only way.
Contact:
David Ickert – VP Finance
940-564-5616
finance@airtractor.com
Ex-Im Bank
Questions?
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Topic: North Texas | Ex-Im Bank Success Stories

Joining the NTC for a free Topic: North Texas webinar presented by Verizon on August, 13, 2014, Kelly Kemp of the U.S. Export-Import Bank and David Ickert of Air Tractor discuss the bank and provide a successful case study.

The U.S. Export-Import Bank (Ex-Im Bank) is a vital export finance tool that supports local businesses at no cost to American taxpayers. The bank allows U.S. companies and workers to compete on a level playing field against our foreign competitors that receive extensive support from their own respective export credit agencies.

Since the 2008 financial crisis, the Ex-Im Bank has helped more than I,200 Texas companies finance more than $l9 billion in exports - more than any other state - in areas such as energy, technology and heavy manufacturing.

Air Tractor, based in Olney, Texas, has been producing agricultural aircraft for more than 50 years.

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Topic: North Texas | Ex-Im Bank Success Stories

  1. 1. Ex-Im Bank
  2. 2. Ex-Im Bank: NTC Webinar August 13, 2014
  3. 3. Who We Are — What We Do Mission: Support US exports in order to create and sustain US jobs Ex-Im Bank is an independent agency of the United States government Established in 1934 Headquartered in Washington, DC 3 regional business development offices, plus satellite locations (Dallas, San Diego, San Francisco, Detroit, Minneapolis, Atlanta, and Seattle)
  4. 4. Ex-Im Bank Regional Offices
  5. 5. Small Business IS Our Business 88% of all Ex-Im Bank transactions supported small business exports! ($4.4 billion authorized)  There were 515 small business first-time users of Ex-Im Bank’s programs  81% of total working capital guarantees loan facilities authorized ($1.2 billion)  91% of total issued export-credit insurance policies ($2.7 billion authorized)  $563 million authorized to support exports by small business known to be minority or woman-owned small businesses  Ex-Im Bank added 11 lenders and 21 brokers servicing small business to the roster of providers of the Bank’s products
  6. 6. Foreign Export Credit Agencies EDC Canada ECGD UK Coface France EulerHermes Germany JBIC Japan Sace Italy KEIC, Keximbank S. Korea OeKB Austria Efic Australia Your foreign competitors have similar support
  7. 7. Who can we help…? Full range of ‘’exporters”  Manufacturers, Service providers, Wholesalers & Distributors, Trading companies…
  8. 8. Eligibility Criteria Country Eligibility  Support available in over 155 countries  Restrictions may apply for political or economic reasons  Refer to the Country Limitation Schedule (CLS) at www.exim.gov, on the homepage under “Shortcuts”
  9. 9. How We Help Increase Your Export Sales Minimize risks Provide a Marketing Advantage Supplement commercial financing
  10. 10. Ex-Im Bank Support Covers the Spectrum Pre-Export Financing Post-Export Financing Working Capital Guarantees Insurance Guarantees Direct Loans
  11. 11. Pre-Export Financing: Working Capital Guarantee Program
  12. 12. Working Capital Guarantee  Assists small and mid-size companies in obtaining working capital to produce or purchase US goods and services for export  Provides a 90% guarantee of repayment (principal and interest) on loans to exporters  May be set up as “Transaction-Specific” or a “Revolving” Line of Credit  No minimum or maximum amounts  Loan supports advances made against export-related inventory (including WIP) and foreign receivables:  Up to 75% advance rate on inventory, and up to 90% on foreign receivables
  13. 13. WCG Increases Borrowing Power
  14. 14. Post-Export Financing: Short-Term Export Credit Insurance
  15. 15. Short-Term Export Credit Insurance Allows exporters to offer competitive credit terms to foreign buyers  Generally up to 180 days, some products may qualify for 360 day terms Obtain additional financing  Insured foreign receivables may be added to your borrowing base by assignment of policy proceeds (claim payments) to lender
  16. 16. Risks Covered Commercial Risks  Insolvency  Bankruptcy  Protracted default Political Risks  Transfer risk  War, revolution, insurrection, expropriation  Cancellation of an import or export license
  17. 17. Single-Buyer, Single Country Small Business Multi-buyer Small Business Multi-buyer – Express Insurance Standard Multi-buyer ___________ A small business is defined by the Small Business Administration at this site: http://www.sba.gov/size-standards-tool?ms=nid4060 In addition, Ex-Im provides its Small Business policies only to those Small Businesses who had average $7.5 mm or less export sales on credit terms over the past three years. Short-Term Policy Types
  18. 18. Buyer Credit Limits For both Small Business and Standard Multi-Buyer policies, a Discretionary Credit Limit (DCL) may be granted to the exporter based upon their export credit management experience Once approved, the exporter may extend credit terms to buyer without prior approval from Ex-Im Bank The exporter must obtain credit information on the buyer or report satisfactory ledger experience to show creditworthiness Credit limits needed ? = SBCL
  19. 19. Special Buyer Credit Limit – SBCL’s (A) Up to $100,000: ▪ Your credit history with the buyer for the last three years, or a current trade reference whose credit limit and payment terms are at least half of those you request, or a current credit agency report. (B) $100,001 - $300,000: ▪ Current credit agency report and either your credit history with the buyer or a trade reference as qualified above. (C) $300,001 - $1,000,000: ▪ "B" above, plus attach or fax the buyer's audited or signed unaudited financial statements with notes for the last two fiscal years. (D) More than $1,000,000: ▪ "B" above, plus attach or fax buyer's audited financial statements with notes and auditor's opinion for the last three fiscal years.
  20. 20. Post-Export Financing Solutions: ... When a Foreign Buyer Needs Term Financing
  21. 21. Medium-Term Insurance and Guarantees Capital equipment sales and related services Lease transactions  Finance Lease: Guarantee Used equipment – can be considered Buyer criteria per Medium-term Credit Standards  Minimum 3 year history  Reliable financial statements (audited if credit exceeds $1 million)  Buyer must meet certain financial ratios
  22. 22.  Minimum 15% down payment required (may be financed by the lender)  100% coverage on the remaining 85% financed portion (both principal and interest)  1 to 5 year repayment, exceptionally 7 years and < $10 million (up to 15 years for certain environmental exports)  Generally limited to buyers in developing markets Ex-Im Bank can now support up to 30% of Local Cost Medium-Term Insurance and Guarantees
  23. 23. Standard Finance Model Net Contract Price: US $1,000,000 Less: 15% Down payment: 150,000 Financed Portion: 850,000 Plus: Ex-Im Exposure Fee: 31,280 (3.68%) Total Financed Amount: $881,280 Payable in 10 equal semi-annual principal payments of $88,128 plus accrued interest.  Pricing Indication: Lender’s interest rate: 6-mo. Libor + 2.5% Lender’s facility fee: 1-2% Ex-Im Commitment Fee: 0.125% (if “Guarantee”) Single shipment ~ 5 year ~ private-sector Mexico
  24. 24. Ex-Im Bank OnLine Our web-based application and transaction management system makes it easier for exporters and lenders to use Ex-Im Bank products. Provides automation of our primary business processes, particularly for those most used by small businesses: All exporter insurance policies (ST and MT) Lender policies for ST and MT buyer credits and letter of credit policy MT guarantees under $10 million
  25. 25. Eligibility Criteria No Defense Articles or Services, or Military Buyers  Exceptions may be made for humanitarian purposes, drug interdiction, dual-use items US Content  Each item must have more than 50% for short-term transaction eligibility  85% of the value of eligible goods and services in the U.S. supply contract; or 100% of the U.S. content in all eligible goods and services in the U.S. supply contract  Services must be performed by US-based personnel, either in the US or in the “host” country
  26. 26. Who can we help…? Full range of ‘’exporters”  Manufacturers, Service providers, Wholesalers & Distributors, Trading companies…
  27. 27. Thank You! Kelly Kemp Export-Import Bank of the US North Texas Branch c/o McKinney Chamber of Commerce 2150 S Central Expressway #150 McKinney, TX 75070 Email: kelly.kemp@exim.gov Phone: 214.551.4959
  28. 28. Ex-Im Bank Case Study: David Ickert Air Tractor
  29. 29. •Air Tractor, Inc. manufactures ag airplanes & forestry fire fighting aircraft. •Small business (260 employees) (100% owned by employees) •Located in Olney, TX, a rural North Texas community. •Up until the 1990’s Air Tractor, Inc. sold most exclusively to the domestic market (U.S.). •In 1995 exports were roughly 10% of sales •Cash or LC transactions
  30. 30. •In 1995, founder Leland Snow wanted a growth strategy focused on increased exports •Could not be done without more favorable financing options •Commercial banks at a domestic level had no desire to lend in foreign markets •Small business lending to small business •Small transaction size •Foreign banks in some markets will not lend to our customers for 5 years
  31. 31. •Discovered the Export-Import Bank •Ex-Im Bank Medium Term Insurance program fit Air Tractor needs in the foreign marketplace •Would insure Air Tractor extension of credit (buyer credits) to foreign customer against default •With protection against customer default via Ex-Im Medium Term Credit Insurance, our commercial bank buys note from Air Tractor
  32. 32. Foreign Customer Air Tractor extends credit to foreign customer U.S. Commercial Bank ATI purchases credit insurance Ex-Im transfers insurance Commercial Bank buys note
  33. 33. •Export Import Bank Medium Term Credit Insurance Program •Facilitates medium term (5-7 years) financing on aircraft for customers in foreign markets •Charges a premium for the use of the program on each transaction •ATI regularly pays between $1–$2 million annually to Ex-Im •Insures Air Tractor & our commercial lender against customer default •Ex-Im does not fund the loan
  34. 34. •Air Tractor responsibilities using Ex-Im Medium Term Insurance •Underwriting •Know Your Customer •Primary point of contact between customer and Ex-Im •Foreign legal fees and in country liens •Exporter takes responsibility
  35. 35. •Excellent history with Ex-Im Bank •Have used Ex-Im Bank Medium Term Insurance program for 20 years •Over 200 transactions •Have never had a claim on medium term Ex-Im supported debt •Grown from 10% exports to roughly 50% exports annually (creating jobs in Olney, TX) •Gives Air Tractor the confidence to aggressively pursue foreign markets •Approx. 25% of our sales have Ex-Im MT Credit Insurance. Thus 25% of our 260 jobs are directly tied to Ex-Im Products •Global exposure for a small rural Texas town of 3,000 people
  36. 36. •₁Foreign ECA’s are rapidly increasing their support for their own exporters •EIU found top 9 ECA’s provided $488 billion (18x Ex-Im support) •More than 60 ECA’s operating globally •China ECA’s authorized $153.8 billion in 2013 vs. Ex-Im’s $27.3 billion •Reducing Ex-Im will disarm U.S. companies against foreign countries •Political threat to Ex-Im Bank September 30, 2014 ₁ Source: Economist Intelligence Unit 2014 study “The Global Export Credit Dimension: The Size of Foreign Export Credit Agencies Compared to the Export-Import Bank of the United States”
  37. 37. In Summation •Air Tractor has no alternative to Ex-Im Bank •Commercial banks will not lend to our end user customer •25% of our jobs directly tied to Ex-Im Bank •Ex-Im returns money to the U.S. treasury and reduces our national deficit •Ex-Im allows small (and medium & large) business to compete in foreign markets •Ex-Im sustains jobs in the U.S. and keeps them domestic •Rural America EXPORTS!
  38. 38. Ex-Im is a small business issue and a Main Street issue. Ex-Im Bank is NOT the easy way, it’s the only way.
  39. 39. Contact: David Ickert – VP Finance 940-564-5616 finance@airtractor.com
  40. 40. Ex-Im Bank Questions?

Joining the NTC for a free Topic: North Texas webinar presented by Verizon on August, 13, 2014, Kelly Kemp of the U.S. Export-Import Bank and David Ickert of Air Tractor discuss the bank and provide a successful case study. The U.S. Export-Import Bank (Ex-Im Bank) is a vital export finance tool that supports local businesses at no cost to American taxpayers. The bank allows U.S. companies and workers to compete on a level playing field against our foreign competitors that receive extensive support from their own respective export credit agencies. Since the 2008 financial crisis, the Ex-Im Bank has helped more than I,200 Texas companies finance more than $l9 billion in exports - more than any other state - in areas such as energy, technology and heavy manufacturing. Air Tractor, based in Olney, Texas, has been producing agricultural aircraft for more than 50 years.

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