JKL

Free Credit-Decision-Making Guidelines for US Exporters Who Do Not Qualify for Ex-Im Bank Credit Insurance
By T. John Keevan-Lynch

The Export-Import Bank of the United States (Ex-ImBank) the U.S government’s Export
Finance agency, has a mandate to support “New and Small” US exporters of US products by,
among other programs, insuring them against non-payment by an overseas buyer (aka “credit
insurance”).

owever, to quality for Ex-ImBank credit insurance, an exporter usually needs to have
been in the same line of business for at least 3 years, have at least one year of exporting
experience, had an operating profit in their most recent fiscal year, etc .. Exceptions are
sometimes made.

In addition, Eximbank insures only sales of product exported from the US and whose US
content is 51% or more (calculated using the product’s Cost-of-Goods-Sold (CGS).

Private sector credit insurers are generally more flexible (and do not require US content
or US export) but their minimum annual premiums are $15,000- $20,000, payable in advance.

What can a New or Small exporter who does not meet those standards do to protect
themselves if they must sell on open account credit terms?

Use the free credit-decision-making guidelines available on Ex-ImBank’s website to
make informed credit decisions and begin to develop a track record.

Start by going to www.Exim.gov and click on or ask for the following online guides:

1) “Country Limitation Schedule” tells you what countries Ex-ImBank considers safe enough to
insure open account credit terms. For example, for sales to private sector buyers in Mexico, ExImBank
will support open account terms, but in the Philippines, Ex-ImBank’s support is
typically limited to Bank Letters of Credit.

2) “Special Buyer Credit Limit Application, item #11” tells you what minimum credit
information Ex-ImBank requires to consider granting a buyer open account terms. For example,
Ex-ImBank will want to see at least one “favorable” credit agency report on the buyer or one
“favorable” trade reference before insuring a credit of $50,000 or less. Higher credit limits
usually require, in addition, buyer financials.

3) “Trade reference form” tells you what questions to ask the reference about the buyer’s credit
and payment history. Trade references are free; credit reports are not. The Ex-ImBank trade
reference form is set up to enable you, the credit analyst, call the trade reference and interview
them while filling out the form. Alternatively, you can email a copy to the trade reference and
wait for an answer. Note that Terms of Sale should be Terms of Credit (Terms of Sales are ExWorks,
CIF, etc.; Terms of Credit are Cash In Advance, COD, open account, etc.).

4) “Short Term Credit Standards” tells you how to interpret/analyse the buyer’s credit
information. Pages 14- 16 cover the criteria Ex-ImBank “generally” looks for in approving
buyer credits and includes financial statement ratios. Page 19 – 22 define, in detail, these criteria.
Pay special attention to how Ex-ImBank defines “favorable” trade references and credit reports.

5) “Specimen Multibuyer policy” can help you anticipate and prepare to deal with buyers who do
not perform as promised. For example, Article 6, C, tells you to stop shipping to any buyer
more than 90 days past due. Article 10 defines a “buyer obligation”, i.e., the documents
typically needed to pursue a debt in the courts of law, should you need to engage an outside
collections agency.

The federal government has a lot of experience supporting export credit. Its accumulated knowledge can be put to work for you.