WHAT IS A WORKING CAPITAL LOAN GUARANTEE?
International markets can represent both tremendous opportunities and special challenges for U.S. exporters. A primary obstacle is the inability to secure financing. The risks associated with international sales can prevent lenders from providing the working capital needed to fulfill export orders. A Working Capital Loan Guarantee from the Export-Import Bank of the United States (EXIM) often gives these lenders the confidence to provide U.S. exporters with the financing to take on new business abroad.
EXIM works with a U.S. company’s lender to provide a loan guarantee that backs the exporter’s debt. With this guarantee in place, the lender can extend a working capital loan to improve the company’s cash flow.
- Working Capital Loan Guarantee
- Steve Freshour
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Steve Freshour joined EXIM as VP of Business Credit in June 2019. He heads the working capital and supply chain guarantee programs and is currently working to modernize these programs based on experience brought from his private sector work in banks and finance companies.
He modernized the EXIM Working Capital Guarantee Program with a new digital application system launched in January 2021. Prior to joining EXIM Steve was and Head of Small Business Banking at Axos Bank, a technology-driven financial services company with approximately $10B in assets. Prior to Axos, Steve was VP of Operations for a venture-backed fintech startup providing term loans and lines of credit to small businesses in the $50k - $500k range. Steve is also a former OCC Bank Examiner and Marine Corps veteran.
Email: steven.freshour@exim.gov
- https://player.vimeo.com/video/842143261?h=44aaedd910
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Key things you will learn to help your business
EXIM Working Capital Loan Guarantee benefits:
- Including Export-Related Assets
- Lenders may be unwilling to use export-related assets as a borrowing basis because the foreign market risk would be beyond the lender’s comfort level. An EXIM Working Capital Loan Guarantee allows U.S. businesses to borrow against assets that lenders would otherwise be unwilling to include as collateral. Assets such as foreign accounts receivable and export-related inventory including raw materials, work-in-progress, and finished goods can become part of the borrowing base.
- Increasing Advance Rates
- When an EXIM Working Capital Loan Guarantee is in place, the advance rates (the percentage of the collateral value a lender is willing to extend for a loan) are higher. These increased advance rates give the U.S. company a larger borrowing base and more access to the funds the company requires.
- Supporting Standby Letters of Credit
- Exporters can find themselves in need of standby letters of credit serving as a bid bond, performance bond, or advance payment guarantee. Supporting these standby letters of credit requires cash collateral. An EXIM Working Capital Loan Guarantee enables exporters to get a loan from their lender to support these bonding needs at 25 percent collateralization. The ability to provide foreign buyers with bid bonds, performance bonds, or advance payment guarantees can give the U.S. exporter an advantage over the competition.
- Including Export-Related Assets
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