Facility Guarantee Program (FGP)___ ________ PROMOTING CAPITAL INFRASTRUCTURE DEVELOPMENT

Facility Guarantee Program - Program Description: ________ Through the provision of credit guarantees - 4Facilitates the extension of credit to foreign banks 4To finance the export of US manufactured goods and services sold to foreign buyers 4To establish or improve agricultural-related facilities in emerging markets

Facility Guarantee Program - Infrastructure Constraints: ___ _ l Poor Refrigeration l Port Congestion l Old Processing Methods l Crude Packaging l Inadequate Storage l Inefficient Handling l Limited Distribution

Facility Guarantee Program - Key Program Criteria: __ Facilitate the sales of goods and services to “emerging markets.” Facilities must “benefit primarily” exports of US agricultural goods. US equipment at least 50% US origin.

Facility Guarantee Program - Program Design: __ l Eligible Foreign Components - foreign produced components that are value- added in the U.S. (at < 50% of contract value); Eligible Foreign Services - foreign freight, marine insurance and approved freight services (at < 50% of contract value ).

Facility Guarantee Program - Program Design (cont.): _ l USDA takes foreign bank risk, not project risk. l Guarantees payment under $US Letter of Credit issued by importer’s bank. l $10 million project limit. l Financing terms up to 8 years.

Facility Guarantee Program - Program Design (cont.): _ l Guarantees 95% of the principal l Interest coverage is about 65% l Importer pays an initial payment of 15% of net contract value l Exporter pays an exposure guarantee fee

Facility Guarantee Program - Program Design (Exposure Fee):_ l A risk-based fee determined country-by-country; l Paid to CCC before issuing the payment guarantee; l Same fee as US EXIM Bank; l Ordinarily nonrefundable.

Facility Guarantee Program - Application and Approval: _ Preliminary Approval 4Country program announced; 4US exporters pay $200 fee; 4US exporters submit application, including statement of interest from US/foreign banks; 4USDA evaluates proposal and impact on U.S. agricultural exports.

Facility Guarantee Program - Application and Approval (cont.):_ Final Commitment: 4If approved, exporter pays Exposure Fee; 4USDA issues payment guarantee; 4Exporter ships goods and may assign guarantee to US bank for immediate payment.

Facility Guarantee Program - Who can Participate? _ l Approved US exporters; l Approved US banks; l Approved Foreign banks; l Importers do not need approval; Eligible countries. 4Creditworthiness analysis; 4Emerging markets.

Facility Guarantee Program - Participating Countries: _ ($ Millions) (Years)