Thomas Hill, VP Union Bank of Caliornia ph , 1 What is Export Finance? Financing support to assist exporters in pursuing overseas markets Designed to help the U.S. exporter in the following areas: –Working Capital Financing associated with overseas orders –Export Credit Insurance designed to protect U.S. companies from non payment risk associated with foreign buyers –Financing extended Terms beyond six months to international clients (International Buyer Credit Financing)

Thomas Hill, VP Union Bank of Caliornia ph , 2 Why is there a need for Export Finance? Most lenders are not willing to take credit risk on the following: –Foreign Accounts Receivable –Inventory related to overseas orders –Foreign Buyers and Importers This reluctance is accentuated when the repayment terms associated with foreign buyers extends out beyond several months

Thomas Hill, VP Union Bank of Caliornia ph , 3 Who is the Export-Import Bank of the United States (Ex-Im Bank)? –U.S. Government Agency with a mission to stimulate U.S. exports by supporting export finance products through repayment guarantees and insurance as well as direct loans –Support available for products and services with 51% and above U.S. content –Most of this group’s support is handled by private banks such as Union Bank who work as Delegated Authority Lenders for working capital. –Also works with private banks as guarantors for medium term financing –Additional information at:

Thomas Hill, VP Union Bank of Caliornia ph , 4 Export Import Bank of the United States Working Capital Guarantee Program Basic Parameters: Asset Based Line of Credit with: –90% Advances on export receivables –75% Advances on export related inventory (including work in progress and raw materials) 90% guarantee for UBOC on principal and interest for export- related inventory and accounts receivables. Must be fully collateralized Normally, personal guarantees are required, but this can be waived, if UBOC would waive them normally, or if UBOS has a domestic ABL line with the company and does not require PGs.

Thomas Hill, VP Union Bank of Caliornia ph , 5 U.S. Content Policy Goods must have at least 50% U.S. content to guarantee the entire transaction. Exports must be manufactured in and shipped from the United States. Exports can contain foreign made components, raw materials, etc. up to the 50% cost of goods sold value.

Thomas Hill, VP Union Bank of Caliornia ph , 6 Case Study: Metal Exporter in southern Exporter of metals to the international aerospace industry Sales of $18 Million USD and growing. Increasing demand from international clients Needs working capital to fund growth $ 1 million in inventory and $1 million in receivables as part of borrowing base under asset based line of credit. Previous bank not advancing on foreign receivables.

Thomas Hill, VP Union Bank of Caliornia ph , 7 Expansion of Collateral Base

Thomas Hill, VP Union Bank of Caliornia ph , 8 International Vendor Financing (also known as medium term buyer financing) Parameters of Vendor Financing to support U.S. exports: –Allows foreign buyers to purchase U.S. exported goods & services –Repayment terms of between 1 and 10 years –Rates can be fixed or floating –15% down-payment normally required (can be less or zero in some cases) –Very competitive rates, usually between 5 and 9% per year (inclusive of fees). Far more competitive than local interest rates in emerging markets –Repayments normally required to be in U.S. dollars or other hard currency (Euro, Yen, etc.) –U.S Exporter is paid upon delivery of the goods/fulfillment of the contract by the U.S. lending bank –U.S. Banks usually have backing either from the U.S. Ex-Im Bank (100% guarantee) or from large private insurers such as AIG, Lloyds of London, etc. (85 to 90% insurance coverage)