Ex-Im Bank takes action to boost exports

 The U.S. Export-Import Bank said it will enhance several of its trade finance products to help counter tightening credit and help exporters.

   These actions help maintain the flow of U.S. exports to international buyers and keep U.S. export workers on the job, said James H. Lambright, chairman and president of Ex-Im Bank, in a statement. We are pleased to do what we can to help meet needs of U.S. exporters facing difficult economic conditions. The bank also announced changes targeted at assisting exporters to South Korea.

   The bank said it will expand access to its trade finance products, making more U.S. exporters eligible to apply for financing backed by the Ex-Im Bank.

   Ex-Im Bank will expand access to direct lending and working capital loan guarantees.

   Phil Cogan, a spokesman for Ex-Im Bank, said in the past the bank has mostly provided loan guarantees because commercial banks could offer a better loan rate. But with credit hard to come by, more exporters are seeking direct loans from Ex-Im Bank.

   The working capital loan guarantees are most frequently used by small business exporters, the bank said. It plans to modify various requirements and restrictions to provide increased liquidity to exporters.

   The Ex-Im Bank said it was taking the following actions:

   *Companies that produce goods or services that are sold to U.S. companies and are subsequently exported will now be eligible to apply for working capital loans guaranteed by Ex-Im Bank. In the past, Ex-Im Bank's working capital loan guarantee product has not been available to small-businesses that supply their products or services to U.S. exporters, but do not themselves directly export. Ex-Im Bank is raising from 10 percent to 100 percent the amount of a working capital loan guarantee available for these undirect exporters, the first time such companies have, on their own, been able to access the product. *Ex-Im Bank will now consider covering warranty letters of credit up to 20 percent of the loan amount or $1.5 million, whichever is lower, for a term of 12 months. This is a tripling of the previous ceiling of $500,000 which the Bank believes will provide additional liquidity to exporters and help them be more competitive. Exporters using Ex-Im Bank for such coverage are required to provide only 25 percent cash collateral versus the standard 100 percent cash collateral in the private sector.  *Staff will now consider, on a case-by-case basis, reducing collateral requirements for letters of credit to 10 percent of face value, down from 25 percent currently versus 100 percent cash collateral for all letters of credit generally required by the private sector. For exporters selling goods to Korea, the bank said it granted special delegated authority to help meet increased demand to insure U.S. lenders?confirmation of Korean bank letters of credit.

   The board's action allows senior Ex-Im Bank officials to approve requests for up to $2.9 billion in insurance cover involving letters of credit issued by 11 Korean financial institutions.

   Ex-Im Bank said surveys of relevant confirming banks and brokers indicate that due to instability in the market there is a significant gap in commercial capacity available to support letters of credit issued by Korean financial institutions.

   The increased demand for confirmed letters of credit stems from the combination of the continuing high volume of U.S. exports to South Korea and weaker macroeconomic conditions, the bank explained.

   The Ex-Im Bank cited figures from the Office of the U.S. Trade Representative, which showed U.S. exports to South Korea exceeded $34 billion in 2007. The bank said Census Bureau figures show the vast majority of U.S. exporters selling to South Korea are small and medium-sized businesses.

Source: American Shipper