US EXIM board takes united action in response to Covid-19 to support US exporters  

To bolster American businesses and workers and their families in response to the Covid-19 (coronavirus) global pandemic, the Export-Import Bank of the United States (EXIM) board of directors underscored its strong support for new initiatives to inject liquidity into the market, according to a press release. 

The bank will also give maximum financing flexibility to facilitate sales of US goods and services abroad, reads the statement. 

Specifically, EXIM's board of directors, through its unanimous adoption of a resolution during an open board meeting with the public via teleconference, affirmed its support of some temporary EXIM programmes. 

The programmes are: Bridge Financing Programme; Pre-Delivery / Pre-Export Financing Programme; Supply Chain Financing Guarantee Program, and Working Capital Guarantee Programme. 

The programmes will provide relief to US businesses, their buyers, financial institutions, and American workers negatively impacted by Covid-19, according to the press statement. 

"We are focused on helping our great American businesses—especially our nation's small businesses—have the support and flexibility they require, meet their liquidity needs, and succeed as our nation and the world grapple with the unprecedented challenges brought on by the Covid-19 global pandemic," said EXIM President and Chairman Kimberly A Reed. 

"EXIM leadership and staff have engaged in robust outreach to US exporters and lenders to understand how we can help in this time of uncertainty and need. Today's actions are a direct result of those conversations," he said, according to the statement. 

"EXIM's board of directors speaks with one voice in support of these measures and we are totally committed to the growth of US exports and jobs," Reed added. 

The resolution expresses the board's support for the four temporary relief measures and "recognises the importance of continuing to explore additional temporary relief measures to fulfill the mission" of EXIM in response to the Covid-19 global pandemic.

"I am proud to join Chairman Reed and Director Pryor in support of these common-sense measures that will provide some relief to our fellow Americans when it's needed most," said EXIM Board Member Spencer Bachus III. 

"Any timely action EXIM can take to provide relief to US manufacturers, and businesses both large and small, may very well help keep American workers on the payroll," said EXIM Board Member Judith D. Pryor. 

"These measures are designed to provide temporary relief to those businesses that have been and will continue to be, the engines of our economic growth," Pryor added. 

"Thank you to EXIM for taking the lead on producing such critical support during this emergency," said Secretary of Commerce Wilbur Ross, an ex officio member of EXIM's board of directors.

"Americans can be confident their Federal government, under the leadership of President Trump, is deeply committed to ensuring exporters, including small businesses, have the support they need during this challenging time, said said United States Trade Representative Robert Lighthizer, also an ex-officio member of the EXIM board.

"As part of our whole-of-government approach, the Export-Import Bank is taking targeted action today by extending assistance and offering relief to its customers in response to the coronavirus pandemic," Lighthizer added.  

According to the Bridge Financing Programme brief, international customers need several billion dollars in temporary, short-term bridge financing to enable them to acquire US goods and services. It will enable exports to go forward through short-term (e.g., one year) financing of these US exports until private sector liquidity returns, the press release reads. 

The Pre-Delivery / Pre-Export Financing Programme brief says that American manufacturers of large-scale items (aircraft, satellites, etc.) often rely on partial, advance payments, or "progress delivery payments," during production. 

However, their international customers may be unable to finance pre-export payments due to temporary liquidity problems caused by the Covid-19 crisis, problems that ultimately threaten US workers and suppliers.

To help meet this challenge EXIM will temporarily expand its Pre-Export Payment Policy for a one-year term for transactions in which EXIM is not providing the long-term financing (such as turbines, locomotives and aircraft) to the buyer and to manufacturing sectors whose international buyers have traditionally not participated but may be interested now due to a lack of commercial financing.

The Supply Chain Financing Guarantee Programme brief is about EXIM's existing Supply Chain Financing Guarantee Program that enables suppliers to sell their accounts receivable to a lender to obtain early payment of invoices at a discounted rate, while EXIM guarantees the lender's purchase of the accounts receivable. 

This helps suppliers obtain cash quickly (often at lower rates that reflect the credit of the buyer) and increase liquidity to fulfill new orders. However, the availability of existing commercial options combined with certain programme features suppresses demand for the offering.

In light of expected liquidity constraints in exporter supply chains, EXIM will expand the programme by relaxing its criteria and increasing its guarantee level, the press statement reads. 

EXIM's Working Capital Guarantee Programme facilitates loans from commercial lenders, typically through Designated Authority (DA) lenders, to creditworthy US businesses that export over the term of the loan. 

Recently many DA lenders expressed to EXIM the need for greater working capital financing support given the significant and growing liquidity pressure on suppliers and exporters.

In response, EXIM will temporarily modify the programme to make it more flexible. Specifically, the agency will expand program eligibility to cover all inventory that could potentially be exported, reduce the program's fee structure, and temporarily increase the guarantee level, according to the statement. 

On March 12, EXIM announced initial relief measures—waivers, deadline extensions, streamlined processing, flexibility—for its working capital loan guarantee and export credit insurance programs to its customers (primarily US small businesses) for an initial period of 30 days.