Small Business Export Credit Insurance Policy

http://www.exim.gov/products/insurance/small_bus_multi_buyer.cfm

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Short-Term Multi-Buyer Export Credit Insurance for Exporters
(Policy Text)
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Small Business Export Credit Insurance Policy

The policy is a special product for small, financially viable businesses that are new to exporting, or have only occasionally exported. It can help increase an exporter’s international sales by extending competitive credit terms while minimizing risks, and is valuable as a:
Risk Mitigation Tool to insure receivables against nonpayment by foreign buyers;
Marketing Tool to extend competitive credit terms to foreign buyers; and
Financing Aid to arrange attractive financing with the exporter’s lender by using insured foreign receivables as additional collateral.
Policy Summary

* Eligible products must have at least 51% U.S. content, including labor but excluding mark-up. Eligible services must be performed by US-based personnel.

* The policy insures all shipments on credit terms (including documentary credits, unconfirmed letters of credit and open account) to all eligible countries during the policy period, generally one year. The policy may be renewed annually.

* Credit terms up to 180 days; exceptionally up to 360 days for qualifying transactions (such as capital equipment and bulk, unprocessed agricultural commodities).

* Excluded from coverage are confirmed letters of credit, cash-in-advance sales, and certain military and defense-related items.

* Special incentives are offered for small business exporters of specified environmentally related products and services.

Types and Percentage of Losses Covered

* Commercial losses due to insolvency, bankruptcy and default are covered at 95%.

* Political losses due to war, revolution, cancellation of an import or export license, currency inconvertibility are covered at 95%.

* No first-loss deductible.

How to Qualify

Together with any parent company, subsidiaries, or affiliates, the exporter must:

1. Be a small business as defined by the Small Business Administration;

2. Have export credit sales (average from the preceding 3 years) not exceeding $7.5 million; and

3. Have at least one year successful operating history and a positive net worth.

Premium Rates and Payments

* Premiums are paid according to a rate schedule and depend on the credit term extended and the buyer type.

* Shipments may be reported anytime the shipment is made, but no later than the 30th of the month following the month of shipment.

* A one-time, refundable advance premium of $500 is required to issue this policy.

* No minimum premium.

Credit Limits

* Credit limits in the policy allow the exporter to extend insured credit without prior approval from Ex-Im Bank.

* The exporter must obtain credit information on the buyer to show its creditworthiness.

* Limits are granted in accordance with the exporter’s experience.

* Ex-Im Bank must pre-approve amounts over the credits limit in the policy and in certain countries (as noted in the Country Limitation Schedule)

Overdue Invoices and Filing Claims

* Report monthly all insured buyers past due over 90 days on amounts over $25,000 for as long as the overdue situation exists, or until a claim is filed.

* Claims may be filed no earlier than 90 days after the due date, and no later than 8 months after the due date.

* Claims are paid within 60 days of receipt of all required documents (faster when filed on-line).

Policy Assignments

Subject to approval, policy proceeds (claim payments) may be assigned to a financial institution to arrange receivables financing or add insured foreign accounts receivable to the borrowing base.

An enhanced assignment, protecting account receivable lenders from exporter performance risks, is available to qualified small businesses.

Last Updated: December 1, 2009
This is not a solicitation by the Export-Import Bank of the United States or its employees. It is a descriptive summary only. The complete terms and conditions of the policy are set forth in the policy, applications, and endorsements.

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