GLOBAL ACCESS FOR SMALL BUSINESS

Private Export Finance Solutions

November 18, 20111:30 p.m.

Presenters:

Gary K. LuxonComerica Bank

Troy W. BrownriggBrownrigg Companies LTD

Bruce BroganFifth Third Bank

Martha I. GabrielseJPMorgan Chase

Bill RichesonPNC Bank

Trade Cycle Financing

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Pre-Shipment Period Post-Shipment Period

Trade Cycle Financing

Export Finance Timeline

Import Shipment

InvoiceBill of Lading

Exporter

Sale

Importer

Payment

Working Capital Financing/PO Finance▪ Bid & Performance Standby L/Cs▪ Export Letters of Credit

Non-LC Solutions▪ Ex-Im Bank Working Capital Program

Foreign Buyer Financing▪ Letters of Credit and Bankers Acceptance Financing (to 180 days)

Non-LC Solutions▪ Documentary Collections and TA Financing▪ A/R Credit Insurance▪ Discounting BAs and Foreign A/Rs▪ Ex-Im Bank: Direct Buyer Financing

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Collateralized by export-related inventory and foreign accounts receivable

Inventory, including raw materials and WIP, advance up to 75%

Foreign accounts receivable advance up to 90%

Supports establishment of standby letters of credit and indirect exports

Generally one year but can be up to three years

Covers exporter performance risk

Note: Provides no protection to exporter against foreign buyer non-payment.

Ex-Im Bank Working Capital Guarantee

Credit facility established by a commercial bank that is backed by an Ex-Im

Bank guarantee at 90% of principal and interest used to support an

exporter’s working capital needs:

5

Transaction Specific

Transaction Specific

Revolving

Revolving Multiple transactions or

specifically identified ones

May be committed for up to

three years with annual reviews

Lines of Credit

Ex-Im Bank Working Capital Guarantee

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Goods Re-sold/UsedGoodsProduced

Extended Terms

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Open Account

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Trade Transaction Timeline

Payment Methods: 4 Methods

Buyer (Importer) Perspective

• Open Account• Documentary Collections• Letter of Credit• Cash In Advance

Seller (Exporter) Perspective

• Cash In Advance• Letter of Credit• Documentary Collection• Open Account

LowestRisk

HighestRisk

BestCashFlow

WorstCashFlow

Buyer and Seller have Reversed Priorities!

Trade Credit Insurance

Who Buys Trade Credit Insurance? Any company that sells goods on credit terms (Net 30/60/90 days) and is

exposed to the risk of non-payment.

Questions to Consider. Has your company considered growing it's export sales in light of the

historical low level of the US Dollar verses other currencies? Has one of your key customers ever defaulted on a payment or filed for

bankruptcy? Can your company benefit from purchase order financing? How well do you really know your buyers?

Types of Policies. Multi-Buyer and Single-Buyer. Credit risk is underwritten based on total

sales or approved limits per buyer.

Trade Credit Insurance

Mitigating Risk: Insure foreign account receivables and services against non-payment of foreign and domestic buyers. Coverage protects against commercial(insolvency, bankruptcy, default) and political(war, political violence, transfer) risks.

Marketing: Know you have the security and competitive edge to take our product global. Increase your sales by expanding into foreign markets.

Financing: Access additional credit by using insured accounts receivables to increase your borrowing capacity.

Costs: Net 60 - Multi-Buyer - $10,000,000 Sales Basis - $40,000 Min. Premium –

12 month - 90% Coinsurance - Foreign and Domestic.

Services: Due Diligence on your Top 20 Buyers, Discretionary Credit Limits, and

Loss Payee / Enhanced Assignment Endorsements.

Our Strategic Partners and Carriers include: Zurich, Coface, Chubb, Chartis(AIG), Great American, EXIM Bank.

Documentary Letter of Credit: Use it to provide short term finance to your Buyer!

Buyer has requested extended payment terms of 90 days from date of shipment

Seller has countered that they will not offer such terms on Open Account basis, but would consider if Buyer provides acceptable LC and agrees to absorb the associated additional costs of financing

Seller talks with their bank, to obtain indicative pricing for 3 key credit/finance driven fees associated with this arrangement:

Confirmation fee Acceptance commission Discount charges

Buyer’s bank issues the LC

Seller’s bank is the Advising and Confirming Bank

LC is payable via a Time Draft to be drawn at 90 days from date of Ocean Bill of Lading

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Seller ships and presents documents to their bank, requesting that the Accepted Draft be discounted.

Documents are examined and found to be in compliance with the LC Time Draft is Accepted under the LC, creating a Bankers Acceptance Seller’s bank discounts the Bankers Acceptance, depositing funds to the account

of the Seller Seller’s bank collects the full amount due under the Bankers Acceptance from the

Issuing Bank at maturity

Illustrative Fees: $300,000 sale to Saudi Arabia at 90 days date of shipment Confirmation fee 1.5% per annum. LC expires 90 days from date of issuance: $1125 Acceptance commission 2% per annum. Documents presented and Bankers Acceptance is

created10 days after shipment, leaving 80 days left until the payment due date: $1333 Discount charges 90 day LIBOR + 2%. Bankers Acceptance is discounted with 80 days left to

maturity: $1833

Total “financing” costs: $4291. 1.43% of the face value of the sale, or 5.72% if you multiply the 90

day cost by 4, to express it as an annualized or 360 day cost

Documentary Letter of Credit: Use it to provide short term finance to your Buyer!L

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Eximbank Medium Term Buyer Finance

• General overview• What goods can be financed• Maximum term• Fees and charges• Information required for pre-qualification• Credit Issues• Processing Time• Examples

QUESTIONS & ANSWERS

Global Access for Small Business

Private Export Finance Solutions

CONTACT INFORMATIONGary K. Luxon, Director – International Trade FinanceComerica Bankgkluxon@comerica.comOffice: 313-222-4903

Troy W. Brownrigg, Licensed Agent – International ProductsBrownrigg Companies LTDtroy.brownrigg@gmail.comOffice: 248-373-5580

Bruce Brogan, VP - Global Trade SolutionsFifth Third Bankbruce.brogan@53.com Office: 248-603-0412

Martha I. Gabrielse, VP - Global TradeJPMorgan Chasemartha.i.gabrielse@jpmchase.com616-771-7410

Bill Richeson, SVP - Global TradePNC Bankwilliam.richeson@pnc.com248-729-8658