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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 US bank ("the Bank")¹ may extend a credit loans to companies in a wide range of countries (a special place take the African countries). In the prevailing cases 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 is 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% "US content", in other words, at least 50% 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.⁴ 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:

LIBOR³ + 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 IIC, European Associates Dev.

II.  Eligible Borrowers

Borrowers must conform to certain standards for creditworthiness, which include but not limited to the following:

• The borrower should have been 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.

• 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.)

• Credit report and creditor bank reference contain no material adverse information.

  The borrower or guarantor must meet the following financial criteria:

1. Positive operating profit and net income in each of the last two years.

2. Positive cash flow from operations in the last fiscal year.

3. Initial Bank¹ exposure does not exceed 40% of borrower's tangible net worth at end of last fiscal year. 

4. Earning Before Interest, Taxes, Depreciation & Amortization (EBITIDA) to Debt Servic is at least 1.5X for the last fiscal year.

5. 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.

6. 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

7. Any interim financial statements should not show any adverse change in financial condition.

International Investment Council 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 (middleman fee including) that usually associate with such transactions for projects intended developing in the non-reach countries may amount at 8 up to 10 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 using its own assets and reasonable obtainable insurance coverage adding percentage in records to the annual interest on the bases of consultancy and agency agreements usually signed with consultant company and the Bank associate financial houses. It is expected, however, but not limited to that the total encumbrances as described above not to exceed the upper margin of the stated annual interest rate of 10%.

IMPORTANT. It is of material effect to 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 & 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.

The above is summary of the kind of financing that IIC together with its associates and partners in the United States and Europe can arrange through the Bank on behalf of importers of equipment made in the United States the providing of cash against the Bank guarantee and the export from the United States. We have substantial experience with both US banks and their various programs and borrowers in the developing countries and the particular circumstances existing there. This experience and our proximity to the US banks would simplify the process of arranging such financing should you decide to pursue this matter. 

Further, our group of partners have extensive contacts in the embassy and multinational agency community in Washington, 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 financial statement. While we would rely on your colleagues to gather information on the borrower, we would undertake to arrange all of the underwriting and documentation of the transaction.

V. The Transaction Process & Timeline

A "time line"⁵ for a transaction including the IIC 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:

1. 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.

2. 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 .

3. 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)

4. 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)

5. 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)

6. 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.

7. Trustee proceeds internal credit approval. (5 days minimum if IIC  has provided adequate Importer's information)

8. The Bank reviews application. (This can take three to six weeks)

9. At the same time as above, Trustee sends L/C opening documents to the Importer.

10. 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 financing 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 USA, 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.

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The above assumes that all information is provided in a timely manner and there are no hitches in the process.
For questions and more information please do not hesitate to contact us.

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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 transactions0. [back to text]

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⁾ Here LIBOR (London Interbank Exchange Offered 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. For the last published periods of time they appear as follows: 

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