A Primer On International Trade Payment And Financing

A Primer On International Trade Payment And Financing

While demand may drive markets, businesses manufacturing goods and services have to have the funds on hand to produce the goods and services and get them into the markets before they can take advantage of this demand.

The Ex-Im Bank Role

This becomes a concern for small to mid-sized business as moving from domestic markets to international markets poses risks, funding issues and challenges in trying to compete with the large national or international companies. These companies already have substantial cash on hand and already established trading partners around the world, creating an advantage over the small business.

To level the playing field and to support small to mid-sized businesses, the Export-Import Bank of the United States (Ex-Im) was established in 1934. This is a specific entity that is tasked with providing financial support to small to mid-sized business to boost the US economy and jobs by driving exports and development of new markets by US companies.

A Quick Overview

Through the Ex-Im bank approved companies, international trade payment and financing programs are available. There are different options for providing working capital (pre-export financing) through to post-export financing (factoring services) offered by the Ex-Im bank.

For a business to be eligible for the international trade payment and financing programs, the business must be a US based company, it must use 85% US content of eligible goods and services in the contract, and it must use US-based employees which can be located in the USA or a designated “host” country.

While the international trade payment and financing are available for over 155 different countries, it is not available for export to all countries. There are also specific types of goods and services which cannot be covered by the funding offered by the Ex-Im bank. In general, items or services related to the military or defense sectors or service provided specifically to military buyers will not be eligible for funding.

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