(The most desire and often practicing by our partners)
I. Credit Review & Compliance
This Review embodies five chapters with footnotes, and attempts to summarize terms, procedure, documents and other customary conditions under which a U.S. bank that has master agreement with Ex-Im Bank of the United States (collectively called "(the Bank")1 may extend a credit loans to companies in a wide range of countries. Prevailing those are loans that support both the borrower's investment engineering projects and the sale of export from the Unite States. In addition, turnover capital for delivery of goods, row materials, etc. from time to time may also be subject of considerations with the Bank.
A program that revoke greatest interest to importers is the Medium-Term Guarantee Program ("Program"). This financing provides credit guarantee facility2, which is particularly appropriate for financing almost any type new or used equipment.
Perhaps the most important factor is that all equipment financed should be at least 50% "U.S. content", in other words, at least 51% of the value of the equipment should be attributable to manufacturing in the United States.
Any U.S. or foreign bank, other financing institution, or other responsible party, including the financing arm of an exporter, can be a lender under the guarantee program. Lenders may be located in the United States or overseas. The borrower must be a creditworthy entity. Foreign buyers include both private sector companies and public sector entities. All borrowers are required to use Electronic Compliance Program.3 This Program is a Web-based system for approval of disbursement. Under this Program, a foreign buyer of items manufactured in the United States can receive financing from a U.S. bank up to and including the terms outlined below:
Maximum Percentage Financed:
85% of the invoiced amount.
Minimum Down Payment:
15% payable by the borrower prior to funding of financed portion.
Repayment Term:
Up to five years. In some particular cases the borrower may apply for up to seven-year loan-life term. Interest and principal due semiannually in arrears.
Interest Rate:
WSJPR4 + a margin to be determined (also see "Pricing and Fees" below).
Disbursement/Grace period:
Six months. The grace period begins six months after the equipment has been installed, provided the equipment is shipped and installed by American companies.
Bank and Legal Fees:
For account of the borrower (Examples of the Bank Exposure Fees are provided below).
Documentation:
As required by and acceptable to the Bank, the Bank's Financial Consultants and International Investment Council (IIC).
II. Eligible Borrowers
Borrowers must conform to certain standards for creditworthiness, which include but not limited to the following:
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The borrower should be in the same general line of business at least three years. If the borrower is a new recently established company, we can still arrange financing so long as there is a guarantor who is able to meet the historical and financial criteria otherwise required of borrowers. These criteria are detailed below.
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The borrower or guarantor must be able to provide financial statements for last 3 years. (It is generally required that these be audited and that auditor's option be unqualified. Unaudited statements might be accepted if the loan amount is less than $1 million.)
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Credit report and creditor bank reference contain no material adverse information.
The borrower or guarantor must meet the following financial criteria:
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Positive operating profit and net income in each of the last two years.
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Positive cash flow from operations in the last fiscal year.
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Initial Bank1 exposure does not exceed 40% of borrower's tangible net worth at end of last fiscal year.
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Earning Before Interest, Taxes, Depreciation & Amortization (EBITIDA) to Debt Service is at least 1.5X for the last fiscal year.
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Total Liabilities (not including any existing Bank-related debt) no greater than 1.75X Tangible Net Worth at the end of the last fiscal year.
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For obligors with sales revenues of less that $50 million in last fiscal year, personal guarantee are required of individuals which ownership interest of 20% or more, and
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Any interim financial statements should not show any adverse change in financial condition.
Printable version of above two sections
III. Loan Pricing and Fees
IIC and its associates would offer financing under the Medium-Term Guarantee Program at competitive interest rates and fees, though pricing would vary according to the size of the financing, the financial capacity of the borrower, the complexity of the transaction and the country. A customary annual interest rate and fees that usually associate with such transactions for projects intended developing in the non-reach countries may amount at 4 up to 5.5 percent.
Please note, that in preparation of the loan application and the documentation in full, including the feasibility study of the project, the final business plan, as well as the auditing of the borrower's financial statements, research of the U.S. market for delivery of the equipment and services, if any, and commercial correspondence and negotiations, if required, specification of the equipment and the payment facilities in connection thereof, etc. calls the borrower to pay compensation for certain service based on Professional Services Contract. The contract price is included in the total loan amount.
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U.S. State Department of Commerce, the state credit and export agencies and the banks involved in these activities do not grant licenses, authiszations and such other accreditations to U.S. consultant companies and overseas for representation and/or privilege review and approval process of loan applications. Any presentation of such activities and offers of services form position like that is violation of the American laws and may by subject of prosecutions to whom proceeds thereat and is identified on the territory of the United States of America. |
IMPORTANT. It is of material
effect to be known that the Bank does not require any mortgage or to hypothecate the equipment or other long-term assets, purchased by the borrower, as collateral. Thus the borrower is free to do so (e.g. for the benefit of a local credit bank) to secure its further credit loans. Hence this option constitutes an acknowledgment of global financial management of the borrower's enterprise. Our experts are experienced and have the financial technique which can be effective in assisting borrowers collateralize their acquisition or further project loans.
IV. Advantage of Working with IIC, eec* & Partners
In transactions like these IIC usually works as an
Investment Banker on "best effort" bases, which assumes an agency
bases for the account of the borrower and an
info-mediation
between the borrower and the Bank. If the borrower needs to use this
service around this time, we are going to work together and in close of
cooperation with couple of associate and partner companies in the US and
in the borrower's region in order to bring the borrower's project to
fruition in due course. We actually have one of the most sophisticated
experts in loan transactions for particular investment and financial
environment, so we are going to walk you through the process of creation
of whole required papers, documents, certificates and other information,
Web-based supervision accounting system for control and service of your project and, finally, we have a good
team of Web designers, and hopefully
the borrower will be able to see the result right online.ze="2">
________
*
еес (east electric company LLC) is U.S. engineering company financial and is organically linked with IIC. [more about еес]The above is summary is to inform you about a large spread recently option of financing your business. IIC together with its associates and partners in the United States can arrange through the Bank on behalf of importers delivery of capital goods, row materials and other commodities and services made in and origin from the United States under credit loan extended by one of the U.S. state agencies. No bank guarantee is required for such a credit transaction for creditworthy borrowers. They should only issue corporate guarantee in form of Promissory Note stipulating the agreed terms for repayment principal and loan interest.
We have substantial experience with both U.S. banks and their various programs and borrowers in the developing countries and the particular circumstances existing there.
This experience and our proximity to the U.S. banks would simplify the process of arranging such financing.
Further, our group of partners have extensive contacts in the circle of embassies and national agency community in Washington DC, which often means that we are aware of public sector opportunities at an early stage and can develop information on private sector borrowers through that network.
IIC can quickly qualify a transaction and borrower once we know the destination and have required financial statement. Utilization of the governmental credit and export agencies of the United States and other G7 countries is a unique opportunity for each prospective investor all over the world.
V. The Transaction Process & Timeline
A "time line"5 for performance of a transaction includes IIC through its agents and representatives in the countries where the projects will be developed and its U.S. partners and associates as a general consultant of the importer, simplifying the procedure involvement through our agents in the regions where the project domicile and our partners in the USA as a general Importer's investment consultant simplifying the procedure of the Bank's Trustee, Somerset Investments Inc. ("Trustee"), as follows:
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An importer in a foreign country ("Importer") submits their written loan request and financial statements for the last three years by a direct mailing to IIC for review and consulting. IIC & partners, including Trustee and the audit company review the documents submitted by the Importer and require additional information, if necessary, prepare the documents in conformity with the requirements of the Program and advice the Importer whether of not meet all requirements, the above set forth including. The Importer are not due to pay for.
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In case the Importer meets the requirements as mentioned above, a contract or contracts should be signed (with Trustee including) for preparing credit documentation and offers for delivery of equipment and/or services from the USA, write pro-forma invoice or invoices for the agreed amounts.
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IIC makes an Application and reference (statement) of the loan request and sends them together with the Importer's audited financial statements and a list of the equipment (including manufacturer, unit cost, year built, total shipment cost) to the Trustee. (One day)
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The Trustee reviews the Application and statements completed to the satisfaction of the Bank, and such other certificates, documents and other papers and information as the Trustee may request. (One day)
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If the Importer qualifies according to the Bank financial standards, Trustee issues a Discussion Terms Sheet for a Loan to the Importer. Trustee also sends a Fee Letter and Mandate Letter. (2 more days)
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Importer reviews the Fee and Mandate Letters and returns to Trustee along with the Client Information Survey and a portion of the arrangement fee as detailed in the proposal.
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Trustee proceeds internal credit approval. (5 days minimum if IIC has provided adequate Importer's information)
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The Bank reviews application. (This can take three to six weeks)
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At the same time as above, Trustee sends L/C opening documents to the Importer.
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If the Bank approves the application, Trustee notifies the Importer.
11. A
Letter of Interest6
(LI) is an indication of the Bank's willingness to
consider a given export transaction. Apply for an LI during the
bidding or negotiating stage of an export sale when the following
conditions exist:
You need an indication from IIC and the
Bank on the general eligibility of the transaction participants and the
goods and services to be exported.
The repayment terms and other program guidelines in the LI provide
you with specific enough guidance for your transaction.
An LI is generally issued within
ten business days after IIC sends the application. The
terms and conditions in the LI are valid for six months. At the request
of the applicant, the LI can be renewed at six-month intervals, for up
to two years. However, the terms are subject to change.
The review of the LI application includes
comparing the transaction information to Bank's cover policy and
identifying any potential issues that may need to be analyzed in more
detail when an AP application is reviewed.
The applicant for an LI is usually the
U.S. exporter (e.g. our daughter company in the U.S.A., IIC, Los Angelis)
or a financial advisor representing the exporter. A financial advisor
acting on behalf of the Buyer (like IIC, London) may also apply for an
LI, but the LI will be issued directly to the Buyer. A Buyer or Borrower
may also apply. The non-refundable processing fee for an LI is $100.
LIs are not available for credit guarantee facilities or exports of
items to be used for nuclear power plants, nuclear fuel research
reactors and related facilities. LIs are available for large aircraft
transactions on a case-by-case basis.
12. Assuming L/C opening documents and legal documents are in place,
it is then up to the exporter to prepare the shipment and deliver
the relevant shipping documents to the Trustee's commercial US bank.
The Importer will also need to have paid 15% down payment by this
time.
13. IIC implements Web-based system for accounting supervision of the
project through the Importers
Web pages7
with privileged access.
The above
assumes that all information is provided in a timely manner and there
are no hitches in the process. 2)
A
credit guarantee facility is a medium-term line of credit
extended to a foreign bank (or foreign company) by a funding bank that
is guaranteed by the Bank. Companies in foreign markets wishing to
purchase U.S. goods or services can approach participating foreign banks
for credit. If the participating foreign bank agrees to extend credit to
the purchaser, it will execute a transaction under the credit guarantee
facility with its correspondent bank (the funding bank). The purchaser
can then advise its U.S. supplier that financing arrangements have been
concluded; the U.S. supplier can then present its export documents to
the funding bank in the United States and receive payment. The funding
bank in turn is guaranteed by the Bank upon presentation of satisfactory
documents and promissory notes. [back to text]
3 4)
WSJPR (Wall Street Journal Prime Rate) is used to facilitate
the reader. However, it is COMMERCIAL INTEREST REFERENCE RATES
(CIRRS) -- the official lending rates of Export Credit Agencies
which is applied as bases whereon the Bank calculates the interest
rates. They are
calculated monthly and are based on government bonds issued in the
country's domestic market for the country's currency. In the case of the
U.S. dollar, the CIRR is based on the U.S. Treasury bond rate. The Bank
has various fees, rates and charges associated with its programs. Most
of the programs have an application or processing fee. Most programs
have a commitment fee, charged after a formal commitment has been
authorized. All programs have an exposure fee, which is related to the
risks of the transaction and takes into account: term, country, and type
of buyer as the primary risk factors. The above is for general
information only. IIC is responsible to keep all calculations and
financial records for its clients.
5)
The "time line"
outlined below in made and adapted by IIC to the financial environment
and circumstances existing in some of the developing countries where IIC
has developed its net of agencies and affiliates in conformity with the
terms and conditions of the Program and the original provide by the
Bank.
[back to text]
7)
The design of Importer's Web site or to add Web pages with
privileged access to existing one by IIC is absolute must for our
participation in the transaction. It allows to any one involved into it
to monitor permanently the process of development of the project
financed by the Program that does not require colateralize the loaned
funds by the borrower. The participants arrange that matter on a
pre-arranged bases.
[back to text]
For questions and more information please do not hesitate to contact us.
1)
Most of the terms and conditions here as well as some obligations laid
out hereinafter refer to the special coverage of the Program for
Supporting U.S. Export and Sustaining American Jobs of the Ex-Im
Bank of the United States; others are specifically developed by so
called funding or commercial banks we usually work with, which are
ranged by the Federal Reserve System. The above content corresponds also
with the customary practice of PEFCO (a group of commercial banks, and
financial companies, all private entities, which offer liquidity support
for export transactions. [back
to text]
March 15, 2010
- April 14, 2010
-- Exim Bank Direct Loans should apply the
following minimum interest rate:
Standard Minimum Interest
Rates
Minimum Interest Rates for
Nuclear Power and Large Hydro-Power Projects [1]
Interest Rate
Repayment Term
(years)
Interest Rate
6)
Letter of Interest is the pivot point of the procedure
predicating inconvertibility of the credit loan transaction. From that
point on the Applicant/Buyer/Borrower/Importer should have been capable
to continue the credit transaction without the Trustее's
assistance.
