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Export Financing |
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TARGET USER: |
Companies seeking to grow market share by
exporting their goods into international markets, but that are unwilling to
assume the economic and/or political risks of non-payment.
The target user may not wish to grant open credit to its foreign buyers or,
if it does, may not qualify for traditional financing of its foreign accounts
receivable. |
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LOAN TYPES: |
The most popular programs involve either: (1)
purchasing a credit insurance policy from a private insurance broker or agent
which would then allow a bank to lend on the insured foreign receivables; or,
(2) obtaining a loan from a lender that participates in the Export-Import
Bank of the United States (“Ex-Im Bank”) guarantee programs.
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OTHER FEATURES AND
RESTRICTIONS: |
-Credit insurance can be purchased for both
foreign and domestic accounts receivable.
- Ex-Im Bank financing is only available when the inventory sold meets a
minimum U.S. content restriction and certain products and foreign buyers will
not qualify.
-These programs are designed to support high and sustained levels of
international sales. |
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ADVANTAGES: |
-Allows a company to expand its market share with limited
risk.
-Provides a source of funding for companies that may not be able to secure
traditional financing of its foreign receivables.
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DISADVANTAGES: |
-Borrowing costs may be higher than traditional
financing because of fees charged by the credit insurer or Ex-Im Bank.
-Requires detailed financial information and reporting.
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HOW TO APPLY: |
Contact your insurance agent about the
availability of foreign credit insurance, or contact a lender that has
experience financing insured receivables or that participates in the Ex-Im
Bank programs. Also visit the website
for FCIA Management Company at www.fcia.com for further information on credit
insurance; or , visit www.exim.gov for additional information about Ex-Im
Bank programs.
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Source: Economic
Development Council |
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Alternative
Finance Committee, 2003 |
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Florida Export Finance Corporation (FEFC) |
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WHO IS FEFC? |
1) |
A not-for-profit corporation established in 1993 to help with
financing needs for export transactions |
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2) |
FEFC has $6.5 million in capitalization provided by the State of
Florida, plus they pay the expense of operation |
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3) |
FEFC provides bank guarantees of up to 90% of a bank loan. Does not provide direct loans |
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4) |
FEFC can use a 5-to-1 leverage ratio of capital when making loan
guarantees |
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5) |
FEFC is not a state agency, but is an entity supported by the
state |
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TARGET USER: |
1) |
Small and medium-sized companies in Florida with fewer than 250
employees and a net worth below $6 million |
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2) |
Transactions under $500,000 |
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3) |
Repayment terms less than one year |
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4) |
Maximum funding over five years not to exceed $500,000 to any
one borrower |
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5) |
Borrowers must be creditworthy; however, unable to qualify for
conventional financing without a guarantee from FEFC |
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HOW TO APPLY: |
1) |
Borrowers should apply to obtain financing with their
established bank |
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2) |
If the loan amount and the borrower meet the requirements
outlined above, the bank officer should contact Steve Fancher, President of
FEFC at (786) 845-0400 to discuss the transaction. The fax number is (786) 845-0404 |
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3) |
The borrower pays a $250 application fee and approximately 1.5%
transaction fee and 1% facility fee |
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ADVANTAGES: |
1) |
Borrowers can obtain funding for export transactions that
otherwise would not be available |
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2) |
Funding by commercial banks, in most cases would qualify under
CRA guidelines |
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DISADVANTAGES: |
1) |
Borrower must meet all qualifications |
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2) |
FEFC has limited capitalization.
Demand could devour capital rather quickly |
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3) |
It costs more to have a guarantee than not to. It is not a
guarantee of the State of Florida |
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Source: Florida Export Finance Corporation, 2003 |
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