World Trade - December 2008 - (Page 29)

Your Working Capital Facility without Ex-Im Bank Collateral Amount Advance Rate Borrowing Base Your Working Capital Facility with an Ex-Im Bank Guarantee Advance Rate Borrowing Base Export Inventory (supported by an Export Order) Raw Materials WIP Finished Goods $ 200,000 200,000 600,000 20% 0% 50% $ 40,000 0 300,000 75% 75% 75% $ 150,000 150,000 450,000 Export/Foreign Accounts Receivable Open Account/ Foreign Account Receivable L/C Backed I/R Total Borrowing Base $ 400,000 0% 0 90% $ 360.000 600,000 70% 420,000 $ 760,000 90% vs. 540,000 $ 1,650,000 This table is an example of how an Ex-Im Bank WCGP loan from a participating lender can increase a U.S. exporter’s borrowing base availability. Source: Export-Import Bank of the United States pharmaceutical, energy and carbon paste industries, and for other non-food industrial uses. With large orders from buyers in Asia, Europe and Latin America, the ﬁrm’s management team identiﬁed the Ex-Im Bank Working Capital Guarantee Program as a great way to support the company’s signiﬁcant export sales growth. Similar to many growing businesses, B&P started out by self-funding its working capital related to export orders. “When we acquired the company in 1995, we planned steady export growth,” recalls Carol Levy, managing partner of Stillwater Investments, a private equity ﬁrm based in New York City. “As we developed new products like decanter centrifuges, improved our continuous mixing devices and beneﬁted from favorable exchange rates, B&P’s export business took oﬀ. We’re glad our bank, J.P. Morgan, has helped us secure the Ex-Im Bank guarantee to support our export sales,” adds Larry Slovin, B&P’s CEO. Characteristics of a Government-Guaranteed Export Working Capital Loan Businesses that can beneﬁt from Ex-Im Bank working capital ﬁnancing commonly have: A need to grow export revenues in spite of limited liquidity, cash ﬂow or resources causing missed export sales A need to extend more favorable terms to clients up to 180 days from date of invoice Creditworthy U.S. based operations (can be foreign owned) with goods manufactured and shipped from the United States. At least 50 percent U.S. content incorporated into export items A need for additional working capital and/or funding availability A large export contract in relation to the balance sheet A need for export-related work-in-process inventory ﬁnancing A requirement to issue performance related standby letters of credit and/or bid bonds Reaching Your International Trading Potential When traditional ﬁnancing oﬀered by commercial banks is not adequate to fund a company’s export sales growth, alternative support in the form of an export working capital guarantee loan may be a viable option. Companies that participate in the U.S. Ex-Im Bank’s Working Capital Guarantee Program are able to obtain the liquidity to expand their export business and realize their international trade goals, even during tough economic times. Luis M. Noriega, vice president for Global Trade Services, serves as Structured Trade Finance Program manager for the Ex-Im Bank Working Capital Guarantee Program at J.P. Morgan. With over 15 years of international banking experience in credit, marketing and product management roles, Mr. Noriega’s range of knowledge and experience includes both classical trade services and trade ﬁnance, as well as emerging payment systems. For more information on global supply chain management, visit J.P. Morgan Global Trade Services at www.jpmorgan.com/trade. http://www.jpmorgan.com/trade

Table of Contents Feed for the Digital Edition of World Trade - December 2008

World Trade - December 2008 Contents The Promise of Peril The Current Reality with IP in China Supply Chain Watch Tradewinds Performance Partners: Awards of Excellence Managing With Mobility What 2009 Bodes for the Supply Chain Small Business Takes to Export Green is Here for Good Fast Fashion

World Trade - December 2008

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