Export Import Bank of the U.S. Trade Credit and Finance with Exports I’m Marianne Hughes, with EXIM Bank’s Western Region. We cover 11 Western states. I’m in California. EXIM Bank was formed with one purpose in mind – to increase jobs through exports! Marianne Hughes Regional Director Los Angeles Gateway Chamber / Los Angeles Harbor College, Wilmington, CA May 11, 2018

EXIM Bank is all about reducing risk. We’ve seen that U. S EXIM Bank is all about reducing risk! We’ve seen that U.S. companies will do more in exports if their risk is reduced. What’s is not so widely-known about EXIM Bank is that 90% or more of what we do is insurance. We are actually an insurance agency – for U.S. exports. We cover the risk of non-payment that U.S. exporters and lenders take on their international business.

Getting Paid Payments for exports Cash before Shipment Bank Letter of Credit Payment Open Invoice/Commercial Terms Photo / Graphic Solution: Short-Term Export Credit Insurance Protects U.S. exporters against non-payment by foreign buyers due to: Commercial Risk (90% to 98% coverage) Political Risk (90% to 100%) We meet companies– large and small – that tell us they have a hard enough time getting paid by their customers in New Jersey – let alone New Delhi or even New Zealand. So they frequently require cash in advance – which can mean lost opportunities. We don’t want to see any U.S. firms miss a good export opportunity – just because of payment terms. With our insurance the exporter can get the sale, extend account terms, with the assurance that EXIM Bank will cover them if the buyer does not pay on that invoice. Photo / Graphic

SHORT-TERM EXPORT CREDIT INSURANCE Protects against non-payment by foreign buyers Commercial Risks: insolvency and protracted default Political Risks: currency inconvertibility; war, revolution, insurgency, expropriation; cancellation of import or export license Coverage ranges from 90% to 100% of the invoiced amount Covers competitive credit terms Up to 180 days for consumable products, as well as sales to distributors Up to 360 days for some bulk agricultural products, as well as sales to end-users of capital equipment That’s with our export credit insurance! Here you see the main events that can cause a non-payment: Insolvency and a protracted default are considered Commercial Risk. Political Risk would include a political event that prevents the buyer from paying. That could include war or insurrection – or even your customer’s import license being cancelled by their government. We’ll cover non-payment caused by commercial or political reasons. Depending on the policy that the exporter takes out, we will cover both categories at 90 – 100% of the invoice. For example, our policy for small businesses covers both at 95%. The terms to the customer can go out to net 180 days. And, longer for capital equipment and bulk agricultural products.

EXPORTER BENEFITS Risk Mitigation Prevention of catastrophic losses to one of the company’s largest, unprotected assets Credit management tool Competitiveness/Marketing Growth of existing accounts New market penetration Utilization of A/R as an Asset Borrowing against foreign receivables Lower borrowing costs Frees up working capital and accelerates cash flow

ESS policy: sales to a single foreign buyer; no first-loss deductible EXPORTER-HELD POLICY TYPES (CONT.) Standard ESC policy: first-loss deductible and market-driven rates; Reasonable Spread of Risk (RSOR) option ESP policy: political-risk only coverage option; no first-loss deductible Small Business ENB/ENV policy: whole turnover with no first-loss deductible and fixed premium rates Express policy: named buyer(s) only with no first-loss deductible and fixed premium rates Single Buyer ESS policy: sales to a single foreign buyer; no first-loss deductible We have s lot of options for U.S. exporters. We have multi-buyer polices that can cover all the exporter’s credit risk. We have a single-buyer policy that an exporter can take out to cover sales to just one buyer. The policies can by used by ANY U.S. exporter that exports products consisting of 51% or more U.S. content and that is shipped from the U.S.

Multi-Buyer Policies for Small Businesses BENEFITS Application Fee: None Deductible: None Advance Premium: None Minimum Premium: None Percentage of Cover: 95% from the U.S. Govt. Premium Rate: Fixed Rate Premiums: ‘Pay as You Ship’ (Premium not due until shipment takes place) For a lot of reasons, our Small Business policies are the most popular. No deductible. Low Rates. High Cover. With our Small Business M0B policy, an exporter can cover all of their foreign Accounts Receivable. The cost is slightly higher than ½ % of the Invoice amount: $0.55 For the less-experienced exporter, they can takeout out our SB Express policy. When they have a new buyer they want to add, they just gives us the name of the customer they want to cover – we’ll run the credit report. Savvy exporters use these policies as a tool to help them become competitive in the marketplace and ramp up their sales.

Case Study: Exporter located in LA County Used Multi-Buyer Insurance Policy until recently Manufacturer of protective products used in the computer industry Began using Ex-Im’s Multi-buyer policy in 2003 for risk mitigation and to expand sales. Key buyers were located in China, Canada, and Israel. In 10 years, international sales grew from approximately $335,000 to $1,175,150. (Export growth of 13% per year)

Case Study: A Nearby LA Exporter Business – both domestic and international had slowed during the recession. During 2012 experienced growth in bridal division and identified opportunities in Europe, Japan and Australia. Manufacturer of women’s lounge ware, bridal gowns and accessories. Took out a Multi-buyer policy and began using it in 2013. International sales to insured buyers grew from $194,000 the first year to $282,625 in 2015 (69% increase).

Case Study: A Nearby LA Exporter Business – maker of labels for medical devices, technology and consumer goods. The firm had large multinational companies and a significant global footprint. They realized that to expand globally, they would need to expand in China. At the time, they felt the Chinese market was very risky. They took out an EXIM Multi-Buyer policy to protect themselves from non- payment by Chinese customers and to negotiate competitive terms. The firm currently exports to Asia, Europe and South America. Exports have become nearly 40% of the firm’s sales.

Case Study: A Small Business Exporter in LA County Exporter: Manufacturer of Perfumes and Cosmetics Buyer: Importer and Seller of Skin Care Products Mexico City, Mexico Terms: O/A net 90 days, High Outstanding $24,000 Sales Progression: 2010 Sales $214,000 / approx $17,000 per mo Began using Ex-Im Bank Single-Buyer Insurance in 2011 (with increased credit limit of $100,000) 2011 Sales $296,000 / approx $24,670 per mo 2012 Sales $440,700 / approx $36,670 per mo 2013 Sales $894,439 / approx $74,537 per mo !!!

EXIM Bank : In Summary Risk Protection Working Capital Guarantees International sales are challenging enough without the added risk of not receiving payment for your goods or services. EXIM’s export credit insurance provides payment coverage for both commercial and political risks. Moreover, your business can count on EXIM to protect your export sales to a single buyer or multiple buyers. Working Capital Guarantees An EXIM guaranteed credit line may provide the vital funds you need to fulfill new orders. These funds may be used to purchase finished products, raw materials, and supplies as well as cover labor and overhead costs. This guaranteed credit line may even cover standby letters of credit used as performance bonds or bid bonds. Extend Credit to Buyers EXIM’s export credit insurance enables your company to offer competitive “open account” terms instead of requiring your foreign buyers to pay cash-in-advance, use credit cards, or secure letters of credit. Furthermore, your insured foreign receivables may be assigned to a commercial lender, thereby increasing your company’s borrowing base and accelerating its cash flow. Term Financing for Buyers EXIM can provide your foreign buyers with term financing at competitive interest rates and longer repayment terms. Foreign buyers can use these funds to buy U.S.-made capital goods and services, helping your business go global. As you see here on the left – the export credit insurance provides risk protection – and it helps the exporter compete for the sale. In addition to risk protection, the insurance can also be the catalyst that enables the exporter to obtain advances on their foreign receivables from their lender. EXIM Bank has two other key programs available to U.S. exporters. Our Working Capital Guarantee can be used by U.S. exporters to finance their exports. Most of these lines – about 95% - are done as a revolving line allowing advance rates of 90% on foreign receivables – and 75% on export-related inventory. The program can also be used as a transaction-specific line that provides the funds needed to fulfil a large new order or contract. All of these lines are done through lenders that work with EXIM Bank. The exporter applies directly to the lender. The lender provides the financing. We guarantee the lender. For companies that export capital goods / equipment, our Medium-Term program enables the foreign buyer to obtain a term loan. The great thing about this program is that the exporter gets paid upon shipment. When it comes to exports, our mission is to help you increase your sales. Here’s my contact info. If any of these programs might benefit your firm, please let me know. We’ll get your questions answered so you can access these tools offered by EXIM Bank.

www.exim.gov 1-800-565-3946 (EXIM) Your Local EXIM Contact: Marianne Hughes Regional Director Phone: (949) 660-0603 Email: marianne.hughes@exim.gov Photo www.exim.gov 1-800-565-3946 (EXIM) ©2015 Export-Import Bank of the United States