Global Trade Solutions Export Financing Methods

1. Global Trade SolutionsExport Financing Methods October 17, 2008 Norfolk, Virginia

2. Trade Services Commercial Letters of Credit - Import & Export Standby Letters of Credit Documentary Collections Export Credit Insurance International Correspondent Banking Trade Finance Working Capital Loans for exports Foreign Receivable Financing Foreign Buyer Financing Products and Services Global Trade Solutions International Trade Products

3. International Trade Finance Global Trade Solutions Traditional payment methods are fine, but what if your customer wants extended terms of payment or your competitors are offering better terms? TRADE FINANCE TOOLS SBA Export Working Capital Program EXIM Bank Working Capital Program SBA and EXIM assists US exporters to obtain PRE EXPORT loans to produce goods or services for export. They guarantee repayment to the lender, making it possible for banks to extend financing to the exporter. EX-IM Bank does not compete with commercial lenders, but assumes the risks they cannot accept. SunTrust Bank is a delegated lender for both SBA and EXIM Bank Programs

4. EXIM & SBA Working Capital Guarantee Programs Global Trade Solutions • BASIC PARAMETERS • The programs supports single transactions or multiple sales under a revolving line • Both programs cover commercial banks for 90 percent of the loan’s principal and accrued interest • Loan must be collateralized by export related accounts receivable and export related inventory • SBA loan maximum is to $1,666,666 exposure • EXIM loan amount – no maximum • Delegated Authority lender under EXIM Bank up to $5 million and SBA Preferred Lender • SBA Export Express

5. EXIM & SBA Working Capital Guarantee Programs Global Trade Solutions • Loan Facilities • Transaction Specific: (Supports a single export purchase order (large ticket item) • Transaction Specific Revolving: Structured to support several export purchase orders normally 2-5) • Revolving Line of Credit: Multiple buyers/Multiple export purchase orders

6. EXIM & SBA Working Capital Guarantee Programs Global Trade Solutions USES OF PROCEEDS • Finance Foreign A/R • Purchase finished products for export • Pay for raw materials, supplies, labor and overhead to produce goods or services for export • Support standby letters of credit serving as performance or payment guarantees for benefit of exporter • ELIGIBILITY • Export Related Inventory may include raw materials, work in process, and finished goods and MUST be located in the United States • Programs do not always require A/R to be insured but we strongly recommend it as it protects the exporter

7. EXIM & SBA Working Capital Guarantee Programs Global Trade Solutions • Basic Application Requirements • SBA/EXIM Joint Application Form • Three years FYE financial statements (plus tax returns), if applicable • Guarantor’s personal financial statement + 3 years tax returns • Company history (type of business, export experience, etc) • Ownership/Management background • Transaction Information

8. Global Trade Solutions Summary Chart – Program Comparisons

9. International Trade Finance Global Trade Solutions EXPORT CREDIT INSURANCE • Available through EXIM Bank and Private Sector Insurers • Enables US exporters to extend “open account” credit terms to international buyers. Insured export receivables looked upon favorably by banks. • Provides policies that protect US exporters against foreign buyer default Commercial risk insurance (buyer bankruptcy and insolvency) Political risk (war, inconvertibility of currency) • Short Term and Medium Term Insurance Policies • Multi Buyer or Single Buyer Policies

10. International Trade Finance • Export Credit Insurance – Pros and Cons • More Aggressive Sales Strategy • Enter Higher Risk Emerging Markets • Obtain Financing – Key Purchasing Consideration • Increased Credit Exposures While Selling on Open Account • It DOES NOT make a a bad credit good • It DOES NOT cover product disputes or contract cancellations • It is CONDITIONAL: claim payment will be made only if insured can demonstrate conformity to the policy’s terms and conditions

11. International Trade Finance • Who Uses Credit Insurance? • Western Europe– 83 percent of World Market • Rest of World– 17 percent of which North America uses only 6 percent • US Firms Typically Insure Inventory, Buildings, People • But 94 percent of domestic receivables in US are not insured Accounts Receivable is 2nd most fluid asset after cash • How is ECI Priced? • Pricing Based on Country Risk, Industry Risk, Buyer Risk, Terms of Payment, Loss Record, Deductible

12. International Trade Finance • INSURED FOREIGN RECEIVABLE FINANCING (IFRF) • Post shipment financing– a financing solution that allows banks to accept the insured export receivables of our domestic exporting clients as collateral in their borrowing base • Most banks’ credit policy excludes advancing against export A/R unless it is insured and monitored by the international division of the bank • Eliminates foreign risk component; AR can be viewed as “domestic” risk • Exporter (our client) is the insured party/administers policy – the bank is loss payee • Provides coverage against commercial (protracted default, insolvency) and political (war, insurrection, acts of God) risk of foreign buyer • Various policies available to insure one buyer or entire book of export AR • Policy coverage averages 90 percent- bank may be able to advance up to that amount against foreign A/R • WIN-WIN for exporter, foreign buyer, and bank

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