Credit insurance is an excellent means to leverage your Balance Sheet by securing non-recourse financing enhanced by the credit insurance policy on your receivables.
Banks. Commercial banks have "asset-based lending" and "international trade finance" departments. Both are capable of structuring creative and sound lending arrangements secured by your insured receivables. "Asset-based lenders" loan against designated assets, including receivables, both domestic and foreign. "International trade finance" departments are schooled in securing loans against insured foreign receivables. Foreign receivables are often excluded by asset-based lenders, or the percentage financed, or "discounted", is greatly reduced. Export credit insurance enables increased financing of foreign receivables on more favorable terms and amounts than otherwise available. The Export Insurance Services group of companies has contacts with bankers all over the region and the country. Banks tend to specialize by market segment (small, medium or large-sized companies), products or geography (U.S. or foreign). We would welcome the opportunity to refer you to one or more of these banks to explore your options.
Forfaiters. A European concept which is taking root in the U.S. provides an excellent, secure means to obtain short or medium term post-shipment trade finance, primarily for capital goods, and commodities. A typical "forfait" transaction would involve the importer's bank opening a deferred payment letter of credit or providing its guarantee of a promissory note or bill of exchange. The exporter's financial institution or "forfaiter", on the strength of the credit standing of the importer's bank, issues its commitment to purchase the proceeds of the letter of credit or the debt instrument on a non-recourse basis. The forfaiter then agrees to discount the export receivable at an interest rate, fixed or floating, which the supplier may pass along to the importer, either by grossing-up the value of the export or by charging the same rate of interest as in the letter of credit or debt instrument. Payments are made according to terms as set by the respective parties. In the event of a default by the importer, the forfaiter has a claim against the importer's bank. The Export Insurance Services Midwest office specializes in this type of financing in addition to credit insurance. We would be pleased to pursue this option for trade finance if it suits your needs.
Nonbank Financial Institutions. Specialty financial institutions, in addition to banks and forfaiters, are often available to address a particular industry, geography or higher risk borrowers. Small businesses, or companies dealing in specialty products or markets might find these specialty lenders of interest. We can refer you to specialists upon request.
U.S. Government. The Small Business Administration and the Eximbank both offer guarantees and loans to stimulate foreign trade for smaller businesses. SBA offers its guarantee of repayment against a commercial loan from a bank, and Eximbank secures the export receivables' portion of the borrower's assets which are used as collateral for the loan. Eximbank also offers its own Working Capital Guaranty program for privately sourced loans as well. Export credit insurance is used as security for both loan programs. Please contact us, or a local U.S. Exporter Assistance Center near you, for more information. In any event, we can provide the appropriate insurance policy which best suits your needs.
P.O. Box 211837 - Augusta, Georgia 30917-1837
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