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Special Financing Options for Environmental Exports

Learn about the special financing options available for environmental exports, including working capital guarantees, export credit insurance, and loan guarantees. Discover eligibility criteria and country limitations. Find out how the Export-Import Bank of the U.S. supports environmental exports and its current financing to India.

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Special Financing Options for Environmental Exports

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  1. Special Financing Options for Environmental Exports Rob Guthrie Business Development Specialist Office of Renewable Energy & Evironmental Exports India Trade Conference - July 29, 2010

  2. Export-Import Bank of the U.S. • Independent, self-funding agency of the U.S. government since 1934; profitable! • MISSION: U.S. JOBS THROUGH EXPORTS • 86% of all companies supported are small businesses • Provides: • Working Capital Guarantees • Export Credit Insurance • Loan Guarantees • Direct Loans

  3. Eligibility Criteria • U.S. Content • Short-term transactions: 51% minimum • Medium/long-term transactions: only U.S. content, up to 85% • No Defense Articles • Exceptions may be made for humanitarian purposes, drug interdiction, & dual-use items • Country Eligibility • Support available in over 155 countries • Restrictions may apply for political or economic reasons • Refer to the Country Limitation Schedule (CLS) at www.exim.gov

  4. Environmental Exports Program • Created in 1994 • In FY 2009, supported $640 million exports of environmentally beneficial goods and services • Created the Office of Renewable Energy & Environmental Exports in 2008

  5. Environmental Exports Program • Enhancements: • Terms of up to 18 years for renewable energy and water treatment projects • Up to 30% local cost support within the U.S. scope of supply • Capitalization of interest during construction • Grace periods of up to 18 months

  6. Ex-Im Bank and India • Ex-Im Bank's current financing to India totals $5.9 billion. • Of this $5.9 billion, $2.2 billion in loan guarantees for Indian transactions were booked in 2009 alone. • India is now Ex-Im Bank’s second largest ‘customer,’ after Mexico ($7.8 billion). • Ex-Im Bank has a number of Indian renewable energy projects in its pipeline of credit applications.

  7. Working Capital Guarantee • Ex-Im Bank provides 90% repayment guarantee for working capital loans, revolving or transaction-based, made by commercial lenders to U.S. companies to finance foreign purchase orders. • Enables exporters to finance export-bound materials, labor, and overhead to produce goods/services for export: 100% collateral. • May be used to cover stand-by letters of credit for bid and performance bonds: 10% collateral.

  8. Expand Your Borrowing Base!

  9. Example: United Solar Ovonic • In Feb. 2008, Ex-Im Bank guaranteed a $25 million revolving working capital credit line for United Solar Ovonic of Auburn Hills, MI (uni-solar.com). • The credit was guaranteed under Ex-Im Bank’s ‘delegated authority' Working Capital Guarantee Program that helps small and medium-sized businesses obtain larger working capital loans in less time.

  10. Example: United Solar Ovonic

  11. Export Credit Insurance • Enables U.S. exporters to offer short- and medium-term credit directly to their customers. • Credit insurance is an attractive substitute to cash-in-advance, letters of credit, and local bank financing. • Using Ex-Im Bank to insure a letter of credit instead of paying bank confirmation charges is usually more cost-effective.

  12. Example: Suniva • Suniva, Inc. of Norcross, GA manufactures high-efficiency solar cells and modules, and exports worldwide (suniva.com). • Ex-Im Bank’s Short-Term Credit Insurance enables Suniva to offer open account credit terms to its distributors. • Replaces bank financing (letter of credit), enabling its distributors to offer credit to their customers.

  13. Example: Suniva • Credit Insurance: Cost to Suniva: • 60 days - 0.55% • 90 days - 0.90% • 180 days - 1.15% • 360 days - 1.77%

  14. Example: Suniva • Financing Alternatives: • Cash in advance: may be too expensive • Foreign letters of credit carry interest rates of 10 – 25% per annum: much less affordable • Private-sector insurance: it’s available, but it’s typically much more expensive; does not cater to small businesses

  15. Suniva: Karnataka, India Project

  16. Buyer Loan Guarantee Program • Guaranteed Loans: made by commercial banks (U.S. or foreign) to a foreign buyer with a 100% unconditional repayment guarantee from Ex-Im Bank. • Coverage: 85% of the U.S. content • Negotiated interest rates, usually a floating rate based on spread over 6-month U.S. dollar LIBOR rate: 0.69% • 15% required cash payment: banks may finance • Guarantee available in major foreign currencies

  17. Example: GT Solar • GT Solar, Inc. of Merrimack NH manufactures solar module production lines (gtsolar.com). • Ex-Im Bank’s provided a 100% medium-term loan guarantee to London Forfaiting to support a $2.25 million loan. • Maharishi Solar Technology Pvt. Ltd. of New Delhi was the buyer.

  18. Example: Bio-Microbics, Inc. • Bio-Microbics Inc., of Shawnee Mission, KS, a small business, exported 10 of its FAST wastewater treatment systems and related equipment to Mexico (biomicrobics.com). • The company benefits from a 10-year, $824,000 Ex-Im Bank 100% loan guarantee. • The transaction received longer than normal repayment terms under Ex-Im Bank's Environmental Exports Program.

  19. Direct Loan Program • Direct Loans are made by Ex-Im Bank to a foreign buyer. • Current interest rate for a 10-18 year loan: ≤ 4.40% • Ex-Im Bank requires the buyer to make a cash payment to the exporter equal to at least 15% of the U.S. supply contract. • 15% cash payment may be borrowed from a lender, or be from the buyer’s own funds.

  20. Example: Clipper Windpower • Ex-Im Bank made a $81 million direct loan in November, 2009 to finance the export of 27 2.5-mw Clipper Windpower turbines to Mexico (clipperwind.com). • The project owner is using Clipper's Liberty turbines to power a 67.5-megawatt wind farm at La Ventosa-La Mata in Oaxaca, Mexico.

  21. Example: Clipper Windpower • A 15-year power purchase agreement was signed with Wal-Mart de Mexico, the nations’s largest employer. • The power purchase price is CHEAPER than what Wal-Mart pays for power from the national grid!

  22. Example: Clipper Windpower

  23. Conclusion • Ex-Im Bank: renewable energy & environmental exports are TOP PRIORITY. • Ex-Im Bank is interested in projects of ANY SIZE. • Ex-Im Bank supports short, medium, and long-term financing to creditworthy international customers, and U.S. borrowers of working capital. • We will work with you to create ‘bankable’ projects

  24. Contacts • Rob Guthrie - Newport Beach, CA • rob.guthrie@exim.gov • Craig O’Connor - Washington, DC • craig.oconnor@exim.gov • Alexandra McCann - Washington, DC • alexandra.mccann@exim.gov • WWW.EXIM.GOV

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