The US Export Import Bank (EXIM) has issued a statement to make aware of the importers and buyers of US products and services including Bangladeshis of new measures due to COVID-19 pandemic.
The Bank said those temporary measures were to expand the types of financing EXIM can provide as part of the US government’s efforts to respond to the COVID-19 pandemic and to address and mitigate the economic impact in the coming months.
The measures - Bridge Financing Program; Pre-Delivery / Pre-Export Financing Program; Supply Chain Financing Guarantee Program; and Working Capital Guarantee Program – will be in effect until May 1, 2021.
“We are focused on helping our great American businesses—especially our nation’s small businesses—have the support and flexibility they require, meet their liquidity needs, and succeed as our nation and the world grapple with the unprecedented challenges brought on by the COVID-19 global pandemic,” said EXIM President and Chairman Kimberly A. Reed. “EXIM leadership and staff have engaged in robust outreach to U.S. exporters and lenders to understand how we can help in this time of uncertainty and need. Today’s actions are a direct result of those conversations,” Reed said.
Bridge Financing Program:
- International customers need several billion dollars in temporary, short-term bridge financing to enable them to acquire U.S. goods and services.
- The Bridge Financing Program will enable exports to go forward through short-term (e.g., one year) financing of these U.S. exports until private sector liquidity returns.
Pre-Delivery / Pre-Export Financing Program:
- American manufacturers of large-scale items (aircraft, satellites, etc.) often rely on partial, advance payments, or “progress delivery payments,” during production. However, their international customers may be unable to finance pre-export payments due to temporary liquidity problems caused by the COVID-19 crisis, problems that ultimately threaten U.S. workers and suppliers.
- To help meet this challenge EXIM will temporarily expand its Pre-Export Payment Policy for a one-year term for transactions in which EXIM is not providing the long-term financing (such as turbines, locomotives and aircraft) to the buyer and to manufacturing sectors whose international buyers have traditionally not participated but may be interested now due to a lack of commercial financing.
Supply Chain Financing Guarantee Program:
- EXIM’s existing Supply Chain Financing Guarantee Program enables suppliers to sell their accounts receivable to a lender to obtain early payment of invoices at a discounted rate, while EXIM guarantees the lender’s purchase of the accounts receivable. This helps suppliers obtain cash quickly (often at lower rates that reflect the credit of the buyer) and increase liquidity to fulfill new orders. However, the availability of existing commercial options combined with certain program features suppresses demand for the offering.
- In light of expected liquidity constraints in exporter supply chains, EXIM will expand the program by relaxing its criteria and increasing its guarantee level.
Working Capital Guarantee Program:
- EXIM’s Working Capital Guarantee Program facilitates loans from commercial lenders, typically through Designated Authority (DA) lenders, to creditworthy U.S. businesses that export over the term of the loan. Recently many DA lenders expressed to EXIM the need for greater working capital financing support given the significant and growing liquidity pressure on suppliers and exporters.
- In response, EXIM will temporarily modify the program to make it more flexible. Specifically, the agency will expand program eligibility to cover all inventory that could potentially be exported, reduce the program’s fee structure, and temporarily increase the guarantee level.
Further details of all of those measures can be found in Exim Bank’s website. On March 12, EXIM announced initial relief measures—waivers, deadline extensions, streamlined processing, flexibility—for its working capital loan guarantee and export credit insurance programmes to its customers (primarily U.S. small businesses) for an initial period of 30 days.
