| Export Financing |
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| TARGET
USER: |
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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: |
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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: |
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-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: |
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-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: |
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-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: |
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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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| 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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FEFC can use a 5-to-1 leverage ratio of capital when making loan
guarantees. |
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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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Repayment terms less than one year |
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Maximum funding over five years not to exceed $500,000 to any
one borrower. |
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Borrowers must be creditworthy; however, unable to qualify for
conventional financing without a guarantee from FEFC. |
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| HOW TO
APPLY: |
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Borrowers should apply to obtain financing with their
established bank. |
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If the loan amount and the borrower meet the requirements
outlined above, the bank officer should contact FEFC at (786) 845-0400. |
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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: |
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Borrowers can obtain funding for export transactions that
otherwise would not be available. |
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Funding by commercial banks, in most cases would qualify under
CRA guidelines. |
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| DISADVANTAGES: |
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Borrower must meet all qualifications |
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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 |
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