In the United States, manufacturers contribute 10.70% to the nation’s total economic output and employ 8.41% of the U.S. workforce. The manufacturing sector generated $2.29 trillion in output in 2023. American manufacturers, especially small and medium-sized enterprises in key national security sectors, often struggle to secure financing for global sales. EXIM is ready to address this challenge and support American jobs.
To boost domestic manufacturing, the Export-Import Bank of the United States, an AEM member company, provides medium- and long-term loans, loan guarantees, and insurance to export-focused projects. By expanding its international buyer financing programs, EXIM will enhance the growth and security of critical supply chains, while continuing to support U.S. jobs throughout the export lifecycle.
The Power of Manufacturing
Manufacturers face significant challenges, particularly high regulatory costs and energy consumption. They incur an average of $29,100 per employee for regulatory compliance, with small manufacturers facing upwards of $50,100 per employee annually. Additionally, industrial energy consumption was 33.25 quadrillion Btu in 2022, projected to rise by 2.9% by 2030. Despite these pressures, manufacturing construction investment has surged, increasing by 25.8% over the past year, driven by industrial policy and efforts to enhance domestic production capacity.
EXIM supports export manufacturers by providing Working Capital Loan Guarantees to help offset the costs associated with operations.
What is a Working Capital Loan Guarantee?
International markets can represent both tremendous opportunities and special challenges for U.S. exporters. A primary obstacle is the inability to secure financing. The risks associated with international sales can prevent lenders from providing the working capital needed to fulfill export orders. A Working Capital Loan Guarantee from EXIM often gives these lenders the confidence to provide U.S. exporters with the financing to take on new business abroad.
Benefits for Your Business
Including Export-Related Assets As Collateral -- Lenders may be unwilling to use export-related assets as a borrowing basis because the international market risk would be beyond the lender’s comfort level. An EXIM Working Capital Loan Guarantee allows U.S. businesses to borrow against assets that lenders would otherwise be unwilling to include as collateral. Assets such as international accounts receivable and export-related inventory including raw materials, work-in progress, and finished goods can become part of the borrowing base.
Increasing Advance Rates -- When an EXIM Working Capital Loan Guarantee is in place, the advance rates (the percentage of the collateral value a lender is willing to extend for a loan) are higher. These increased advance rates give the U.S. company a larger borrowing base and more access to the funds the company requires.
Supporting Standby Letters of Credit -- Exporters can find themselves in need of standby letters of credit serving as a bid bond, performance bond, or advance payment guarantee. Supporting these standby letters of credit requires cash collateral. An EXIM Working Capital Loan Guarantee enables exporters get a loan from their lender to support these bonding needs at 25 percent collateralization. The ability to provide international buyers with bid bonds, performance bonds, or advance payment guarantees can give the U.S. exporter an advantage over the competition.
Increase Your Borrowing Power
Below is an example of how a lender may evaluate export-based collateral. When a working capital loan is guaranteed by EXIM, lender advance rates tend to be higher. This creates a larger borrowing base.
How Does a Loan Guarantee Work?
Step 1: You export and want to grow export sales, but need to finance export accounts receivable and inventory destined for export.
Step 2: You apply for a working capital loan, but your lender won't approve it because your collateral is export-related.
Step 3: Lenders with delegated authority process your working capital loan under established EXIM criteria.
Step 4: Your lender loans you the money. You use the money to fulfill your export sale.
Application Process
Basic Eligibility Requirements:
- Must be a U.S. company with at least one year of operating history and a positive net worth
- Exports must be shipped from the United States
- Exports must have a minimum of 50 percent U.S. content based on all direct and indirect costs (e.g., labor, materials, administrative costs)
- Services must be performed by U.S.A.-based personnel
- EXIM cannot support exports of military/defense products and services (with some exceptions), or purchases made by military buyers
How to Apply
A small business exporter may apply through any lender that has been granted delegated authority from EXIM. Most lenders with whom we have established working relationships have been granted discretionary pre-approved credit status (after rigorous screening) known as delegated authority—allowing them to process your working capital loan under established criteria without pre-approval from EXIM.
About the Export-Import Bank of the United States
The Export-Import Bank of the United States is the official export credit agency of the United States. Its mission is to support American job creation, prosperity and security through exporting. This is accomplished this by unlocking financing solutions for U.S. companies competing around the globe, by helping level the playing field and fill gaps in private sector financing. For more information, visit www.exim.gov.
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