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 Export–Import Bank was established by an executive
order organized by President Franklin
D. Roosevelt under the name Export–Import 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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