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Understanding Global Credit Express for International Trade Finance

The US Export/Import Bank introduced a new program in early 2012 that is a form of direct lending. It is designed to finance the business of exporting as opposed to specific export transactions.

Traditionally, an export working capital guarantee is one that is a very tightly structured guaranteed line of credit. The guarantee is for the one who provides the financing for the exporter. In order to qualify, the borrower must have export orders. Advances must be used to support the cash flow requirements to fill those export orders. Global Credit Express is secured financing. It is based on a monthly borrowing base reporting, and may require audits.

It does not rely on a borrowing base that is supported by inventory for export or export accounts receivable, and is not tied to specific export orders. Proceeds for goods and services that are necessary to support their export business, can be paid from this loan. It can include things like: staff costs for developing or modifying systems to monitor and account for export sales , translating marketing materials and owner’s manuals, business development expenses and product registrations.

To qualify, the borrower must first meet the SBA definition of a small business, have at least three years of operating history, and have one year of exporting experience. The borrower must also meet a minimum Fair Isaac small business credit score, and have a due diligence credit evaluation.

The loan has a fixed interest rate and is a revolving line of credit. A spread of 2.6% per annum over the current commercial interest reference rate is the how the interest rate is determined. You can find the commercial interest rate on the Export/Import Bank’s website. The borrower is also responsible these costs: a $500 application fee, a $2,000 origination fee, and an exposure fee of 2.5% of the approved loan amount.

There is a maximum loan amount is $500,000. The maximum term is 12 months. The maximum loan amount for each business is calculated by using the lesser of these things: 50% of the borrower’s direct and indirect exports in the previous year, 90% of the borrower’s net current assets as per their most recent financial statement, or $500,000. The borrower can draw in full or in part from the loan amount, however, a minimum drawing of $10,000 is required. If the borrower again meets the approval criteria, including the small business requirement, the loan can be renewed annually.

The borrower can only access Global Credit Express through an Export/Import Bank approved originating lender or originating broker. The existing lender has little or no involvement in the process. Upon approval, the bank provides direct lending to the exporter, and not a guarantee to their existing lender.

Small businesses can access additional capital to finance various components of their export business, not just production through Global Credit Express. It is a streamlined approval process. It has a low fixed interest rate, and no collateral base or reporting requirements. To find out if this is an appropriate for your particular situation, you can check with an approved originator.

 

 
 
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