John Brislin – President & CEO Export Finance Assistance Center of Washington (EFACW)

Federal Government GuaranteedExport Finance Programs: A Tool for Business & Economic DevelopmentWEDA 2012 Spring/Summer Conference John Brislin – President & CEO Export Finance Assistance Center of Washington (EFACW)

Export Finance Assistance Centerof Washington (EFACW) • Established by the state legislature in 1983 as a non-profit to provide free export finance counseling assistance to small and medium-sized businesses that are currently exporting or are interested in exporting their goods and services • Funding comes from state legislature through Washington State Department of Commerce

Export Finance Assistance Centerof Washington (EFACW) • Representsthe Export-Import Bank of the United States (Ex-Im Bank) as a City-State partner • Representsthe Overseas Private Investment Corporation (OPIC) as a Partner • Works closely in cooperation with SBA International Trade Specialist

Export Finance Assistance Centerof Washington (EFACW) Roles • Export Finance Advisor • Export Finance Matchmaker • Export Finance Educator

Export Finance Assistance Centerof Washington (EFACW) Partners • EFACW works with sponsors for events • Industry and business associations • Economic development and trade organizations • Local governments and ports • CERB Grant Recipients

Export Finance Assistance Centerof Washington (EFACW) Programs • Export Resources – program focuses on resources available to assist when exporting • Outcomes of this type of program are: • Encourage businesses to start/increase exporting • Introduce export resources • Instruct attendees on which organizations provide which services • Provide guidance on the types of issues that an exporter may face and how export resources can work to resolve those issues

Export Finance Assistance Centerof Washington (EFACW) Programs • How to Export – program serves as “how to” training for companies who have decided that they would like to start exporting or increase their exporting activity • Outcomes of this type of program are: • Outline the makeup of an export plan • Learn how to select markets and find overseas buyers • Understand how to get paid and access financing • Generate ideas on how to move their goods • Understand basic export controls and shipping regulations

Export Finance Assistance Centerof Washington (EFACW) Program • Lender Training – program focuses on Delegated Authority lender training provided locally by Ex-Im Bank staff • Outcomes of these programs are: • Introduce lenders to government programs that reduce a bank’s risk in a foreign transaction • Teach lenders the nuances of government loan programs • Increase participation in export finance government guarantee loan programs • Introduce lenders to programs their clients can use to find more buyers and reach overseas markets, thus increasing the revenue of the bank

Export Finance Assistance Centerof Washington (EFACW) Program • Increasing Access to Trade Finance – new program funded by SBA’s STEP Grant • Current program has three phases: • Holding roundtable meetings with banks to find out why they do not lend to exporters • Invite representatives of federal and state agencies to speak to banks locally about how the government programs work • Bring in federal agencies to provide lender training locally to entice participation in the government programs

Survey: Sources of Export Finance What is your primary method of financing your export operations? • Earnings/savings of the business 62% • Traditional bank loan, no government program 17% • Credit cards 15% • Ex-Im Bank loans 4% • Personal savings 2% • SBA loan 0% Source: 2010 NSBA/SBEA Small Business Exporting Survey

Survey: Barriers to Export What do you consider the main barriers to selling your goods and/or services to foreign customers? • I don’t have goods and/or services that are exportable 49% • Don’t know much about it and not sure where to start 38% • I’d worry too much about getting paid 29% • Too costly 27% • It takes too much time away from my domestic sales 17% • Can’t get financing to offer foreign customers 7% Source: 2010 NSBA/SBEA Small Business Exporting Survey

Payment Methods There are four primary methods of payment for global transactions, with the level of risk varying for each

Export Import Bank of the United States (Ex-Im Bank) • Support U.S. exports when faced with competition supported by foreign government entities in order to create and sustain U.S. jobs • Induces domestic banks to lend outside of usual practices • Strategic initiatives for certain industries and countries

Export Import Bank of the United States (Ex-Im Bank) • Supplements commercial financing for pre and post-export financing at small business rates • Working Capital Guarantee for sellers • Export Credit Insurance for sellers • Medium & Long Terms Loan Guarantees for buyers

Sources of Export FinancingPre-Export Financing • Working Capital Line of Credit • Most banks are not comfortable with export-related assets as security for a loan. • As a result, both Ex-Im Bank and SBA have guarantee programs for lenders to induce them to provide a line of credit to support exports.

Sources of Export FinancingPre-Export Financing • Export Working Capital Program (EWCP) – Ex-Im Bank provides guarantees to banks to provide asset-based lending program that loans against export raw materials, work in progress, inventory, and foreign accounts receivable. • Key Features are: • Exporters must adhere to the Bank’s requirements for content, end use, and buyer country • Non-refundable $100 application fee and a 1.5 percent upfront facility fee is based on the total loan amount and a one-year loan but may be reduced. • Fees and interest charged by banks are usually negotiable

Sources of Export FinancingPost-Export Financing • Export Credit Insurance – provides protection against commercial and political losses, especially on open account sales. It can be obtained from Ex-Im Bank as well as private insurers. • Receivable Financing – with export credit insurance, commercial and non-bank lenders are often willing to lend into a portion of foreign accounts receivable. With an enhanced assignment, some companies will advance as much as 90 percent.

Sources of Export FinancingBuyer Finance • Medium & Long Term Loan Guarantees – Ex-Im Bank guarantees commercial loans to creditworthy foreign buyers in emerging for purchases of U.S. goods and services. They finance the purchase of high-value capital equipment or services or exports to large-scale projects that require medium- or long-term financing. • Can also be used to finance: • purchase of refurbished equipment • Software • certain banking and legal fees • local costs and expenses.

Export Working Capital Guarantee • A guarantee made to a commercial lender who makes a loan to an exporter for the purchase or manufacturing of U.S. goods and services to be exported. • The loan expands access to EWC for supplier financing and production costs. • The loan maximizes the borrowing base by turning export inventory and accounts receivable into cash. • May be transaction specific or revolving line of credit

SBA Export Finance Programs • Export Express Program • Export Working Capital Program • International Trade Loan Program

SBA Export Express • SBA’s Export Express Loan provides fast and easy loans for small exporters. 70% of all exporters have fewer than 20 employees. • Streamlined financing up to $500,000. SBA Export Express offers flexibility and ease of use to both borrowers and lenders. • Any business that has been in operation, although not necessarily in exporting, for at least 12 full months and can demonstrate that the loan proceeds will support its export activity is eligible for Export Express.

SBA Export Express Use of Proceeds • Loan proceeds may be used for business purposes that will enhance a company’s export development. • Export Express can take the form of a term loan or a revolving line of credit. • Proceeds can be used to fund participation in a foreign trade show, finance standby letters of credit, translate product literature for use in foreign markets, finance specific export orders, as well as to finance expansions, equipment purchases, and inventory or real estate acquisitions, etc.

SBA Export Working Capital Program • Permits increased global competitiveness by allowing the exporter to extend more liberal sales terms • Increases sales prospects in under-developed markets which have high capital costs for importers • Contributes to the growth of export sales • Low fees and quick processing times

SBA Export Working Capital Program • Exporters can apply for EWCP loans in advance of finalizing an export sale or contract. • With an approved EWCP loan in place, exporters have greater flexibility in negotiating export payment terms—secure in the assurance that adequate financing will be in place when the export order is won.

SBA Export Working Capital Program Use of Proceeds • Financing for suppliers, inventory or production of export goods • Export working capital during long payment cycles • Financing for stand-by letters of credit used as bid or performance bonds or down payment guarantees • Reserves domestic working capital for the company’s sales within the U.S.

SBA International Trade Loan (ITL) • SBA’s International Trade Loan (ITL) provides small businesses with enhanced export financing options for their export transactions. • The ITL is designed to help small businesses enter and expand into international markets and, when adversely affected by import competition, make the investments necessary to better compete. • SBA’s International Trade Loan offers a combination of fixed asset, working capital financing and debt refinancing with the SBA’s maximum guaranty— 90 percent— on the total loan amount.

SBA International Trade Loan (ITL) Use of Proceeds • For the facilities and equipment portion of the loan, proceeds may be used to acquire, construct, renovate, modernize, improve or expand facilities or equipment in the U.S. to produce goods or services involved in international trade. • Working capital is an allowable use of proceeds under the ITL. • Proceeds may be used for the refinancing of debt structured with unreasonable terms and conditions, including any debt that qualifies for refinancing under the standard SBA 7(a) Loan Program.

Sources of Export Financing • Trade Finance Players • Federal • Export Import Bank of the United States (Ex-Im Bank) • U.S. Small Business Administration (SBA) • U.S. Department of Agriculture (USDA) • Overseas Private Investment Corp (OPIC) • Private • Banks • Non-Bank Lenders • Insurance Companies

Export Finance Assistance Center of Washington (EFACW) How to Help Identify + Refer = Multiplier • How you can help • Identify and refer clients who are interested in exporting • Identify and refer clients who are good candidates for exporting • Host or sponsor export program • Information sharing about EFACW and other resources

Export Finance Assistance Center of Washington (EFACW) How to Help Questions to ask • Do you ship to Canada or Mexico? • Do you sell overseas? • Do you sell domestically to companies who export your product? • Have your domestic sales flattened or decreased? • Has your company had a change in management? • Has your company had a change in ownership?

Export Finance Assistance Centerof Washington (EFACW) Teamwork Exporting takes teamwork to succeed Teamwork is the fuel that allows common people to attain uncommon results

EFACW Contacts John Brislin Natalie Campbell President & CEO Export Finance Program Manager 206-256-6127 206-256-6115 John.Brislin@efacw.orgNatalie.Campbell@efacw.org The Westin Building 2001 Sixth Avenue Suite 2600 Seattle, Washington 98121 www.efacw.org

John Brislin – President & CEO Export Finance Assistance Center of Washington (EFACW)