EXIM Support for U.S. Indirect Export Activity

The United States exported over $2 trillion worth of goods last year, according to Tradestats, an interactive tool created by the International Trade Administration (ITA) that sources U.S. Census Bureau data. While this figure accounts for direct export activity, indirect exports feed into the U.S. supply chain and EXIM offers products and programs that support indirect export activity through Supply Chain Finance Guarantees and Working Capital Loan Guarantees.

EXIM’s Supply Chain Finance Guarantee applies to receivables financing for U.S. exporters and their U.S. suppliers. A U.S. exporter’s suppliers benefit from the program because they are paid for their goods within a few days via a disbursement from an approved private sector lender’s facility backed by a guarantee from EXIM instead of getting paid directly by the exporter through conventional credit terms (e.g. net 30 or 60). The exporter also benefits from its suppliers quickly getting paid via the lender’s receivables financing, and in turn, pays back the lender’s facility by the original invoice due dates. For example, if a supplier invoice for a U.S. exporter has net 60 credit terms, the lender can quickly discount and pay the supplier (via making a disbursement under the facility), while the exporter has 60 days to generate the cashflow to pay down the amount disbursed by the lender.EXIM’s Working Capital Loan Guarantee program is similar in that there is an agreement between EXIM and a U.S. business’s approved private sector lender. EXIM provides a loan guarantee that backs the lender’s working capital loan to the business. The working capital loan supports advances made against the business’s export-related inventory and export-related receivables, enabling the business to improve its cash flow. To benefit from this program, the business could either be directly exporting to an international buyer or indirectly exporting by selling to another U.S. entity that will eventually export its products.

When indirect exports are supported by a Supply Chain Finance Guarantee or a Working Capital Loan Guarantee facility, the borrower and lender must obtain evidence of intent from the U.S. entity to export such goods from the U.S. Also, the ultimate international buyer for the items must be located in a country in which EXIM is open for business, per the Country Limitation Schedule (CLS).

To learn more about these and other EXIM products and programs, please click here to schedule a consultation request with an EXIM trade finance specialist.