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he Export–Import Bank of the United States (abbreviated as EXIM or known as the Bank) is the official export credit agency (ECA) of the United States federal government.   A wholly owned federal government corporation, the Bank “assists in financing and facilitating U.S. exports of goods and services.”   When private sector lenders are unable or unwilling to provide financing, equipping American businesses with the financing tools necessary to compete for global sales, EXIM can intervene. The Bank’s mission is to promote U.S. goods and services at no cost to U.S. taxpayers, protecting “made in America” products against foreign competition in overseas markets and encouraging the creation of American jobs.

Founded in 1934, the ExportImport Bank was established by an executive order organized by President Franklin D. Roosevelt under the name ExportImport Bank of Washington. The stated goal was “to aid in financing and to facilitate exports and imports and the exchange of commodities between the United States and other Nations or the agencies or nationals thereof.”  The Bank's first transaction was a $3.8 million loan to Cuba in 1935 for the purchase of U.S. silver ingots. In 1945, it was made an independent agency in the Executive Branch by Congress. It was last chartered for a three-year term in 2012 and in September 2014 was extended through June 30, 2015.  Congressional authorization for the bank lapsed as of July 1, 2015. As a result, the bank could not engage in new business, but it continued to manage its existing loan portfolio.  Five months later, after the successful employment of the rarely used discharge petition procedure in the House of Representatives, the U.S. Congress reauthorized the bank until September 2019 via the Fixing America's Surface Transportation Act signed into law on December 4, 2015, by President Barack Obama.  In December of 2019, President Donald Trump signed the Export-Import Bank Extension into law as part of the Further Consolidated Appropriations Act, 2020 (P.L. 116-94) which authorized the bank until December 31st, 2026.

Established in 1994, the tied-aid fund can neutralize the long-term low-rate financing the governments of industrial nations offer their exporters to win profitable contracts in developing countries. Faced with such a bidding inequity, an exporter can turn to the Ex-Im Bank to fund low-cost financing from its tied-aid “War Chest” thereby leveling the playing field for US exporters competing for rapidly-growing emerging markets..

Smaller businesses benefit from substantial improvements and greater flexibility made in the Working Capital Guarantee Program. Smaller banks designated Level “B” lenders are delegated be authority to lend up to $2.0 million per exporter, with a total limit per lender of $25.0 million. Loans up to $3.5 million per exporter can be approved by Level “A” lenders who have a total limit of $50.0 million. Level “AA,” enables the largest banks to approve loans up to $5.0 million per exporter with their own lending limit raised to $75.0 million.

Easing the burden of total financing costs, the Ex–Im Bank shares its facility fee (1.50 percent) with the delegated authority lender. The lender retains 1.25 percent and remits only 0.25 percent of the facility fee to the Bank for all loans up to $2.0 million. And the facility fee is shared equally between the lender and the Ex–Im Bank for just that portion of larger loans exceeding $2.0 million.

The range of acceptable collateral for working capital guarantees is enlarged.  First, costs incurred by service companies in the fulfillment of export sales — e.g., design, engineering, labor and overhead expenses connected with particular contracts — are a part of the collateral base. Previously lacking traditional collateral — viz. inventories — this facilitates working capital credits for service companies such as environmental consulting and architectural/engineering firms.

And second, certain loan structuring requirements can be “customized” on a case-by-case basis when accounts receivable are due and collectible through a smaller company’s offshore affiliates. Further, the collateral requirement for performance guarantees is 25 percent.

Although it may have received a bad rap in the past, the Ex–Im Bank is clearly working innovatively to improve its accessibility to the smaller business.  Credit insurance is increasingly important to the smaller exporters to protect them and their banks against foreign customer defaults.

The Ex–Im Bank is seeking further ways to meet the needs and expectations of the smaller business.  Smaller exporters contribute substantially to job creation and entrepreneurial expansion within the United States.

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Thomas A. Faulhaber, Editor

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