What the EXIM Bank reauthorization means for your business

By Chantal Wittman Meier, VP, International Banking

The Export-Import Bank helps U.S. exporters compete for global sales by mitigating risk and providing access to credit financing.

In December, Congress leveled the playing field for U.S. business by reviving the federal Export-Import (EXIM) Bank, an independent federal agency which empowers exporters of U.S. goods and services by providing trade financing solutions. Congress had allowed the bank’s charter to expire in June of last year, for the first time in its 81-year history. But as part of a transportation bill passed in late 2015, the EXIM Bank secured a long-term reauthorization until Sept. 30, 2019.

How the EXIM Bank Works

The EXIM Bank offers access to financing as well as mitigates risk by protecting exporters against nonpayment from foreign buyers. When American businesses are unable to access private export financing, the EXIM Bank fills the gaps by equipping them with the tools necessary to compete for global sales through export credit insurance, working capital guarantees and guarantees of commercial loans to foreign buyers. The bank serves both large companies and small businesses, supporting domestic manufacturers and exporters and allowing them to retain U.S. jobs.

According to EXIM Bank statistics, in fiscal year 2015, the bank approved $12.5 billion in total authorizations which supported an estimated $17.7 billion in U.S. export sales, and approximately 109,000 American jobs in communities across the country.

EXIM in Illinois

The EXIM Bank is especially crucial in Illinois — the top exporting state in the Midwest and one of the top five exporting states nationwide. Sen. Mark Kirk, who was a proponent of the reauthorization legislation, noted that the EXIM Bank supports 244 businesses and 47,000 jobs in Illinois alone.

In addition to larger Illinois exporters such as Boeing and Caterpillar, smaller businesses that supply parts and equipment to these types of manufacturers can also take advantage of EXIM programs as indirect exporters. EXIM Bank is one of the few credit insurance providers where small exporters can obtain credit insurance coverage for one buyer or an entire portfolio and pay on a monthly basis, rather than with a large upfront premium. Having access to credit insurance, which mitigates repayment risk on their receivables, helps small or medium-sized companies compete against larger and better capitalized companies as they can assign their insurance policies to a lender and monetize these valuable assets. This levels the playing field for small and medium sized firms to compete in overseas markets.

Partner with Your Bank

To take full advantage of EXIM Bank’s services, the first stop should be to your bank’s relationship manager or international banking department. Many banks are delegated authority lenders of EXIM Bank, which allows them the ability to quickly make decisions about extending credit financing to clients. Your bank can be a great resource of information and counsel about the financing programs and tools available through the EXIM Bank.

Providing Competitiveness on the Global Stage

EXIM Bank enables both large and small businesses to venture into new markets and be more competitive. The programs of EXIM Bank provide an opportunity for Illinois businesses to win sales, bolster job growth and even the playing field in global markets. The end result? U.S. companies need not lose out on a sale because of attractive financing from foreign governments for their exporters.