Global Business Solutions (GBS) by Dennis R. Chrisbaum

6th Annual SBA Export Lenders Roundtable Washington, D.C.

April 3, 2013

U.S. Global Business Solutions (GBS)

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“Because the more products we make and sell to other countries, the more jobs we support right here in America… Tonight we set a new goal: We will double our exports over the next five years, an increase that will support two million jobs in America. To help meet this goal, we're launching a National Export Initiative that will help farmers and small businesses increase their exports…”

President Barack Obama

State of the Union Address January 27, 2010

Na#onal Export Ini#a#ve

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It’s About Jobs and GDP Growth!

2009 2010 2011 2012

8.5

9.1

9.7 9.8

Million

sJobs Supported by U.S. Exports, 2009-2012

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Role of Exports to a Country’s GDP

Exports as a Percent of GDP

Germany 42% China 40% Canada 36% India 22% Japan 16% USA 13.9%

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Number of Exporters is Expanding

223,933

227,300

232,828

240,376

247,985

268,526

289,711

276,643

293,131

0.00

100,000.00

200,000.00

300,000.00

400,000.00

2002 2003 2004 2005 2006 2007 2008 2009 2010

Number of U.S. Companies ExporCng, 2002-‐2010

98% or 287,000 are Small Businesses

6

25

27

29

31

33

35

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

percen

tage of total

Source: U.S. Department of Commerce, U.S. Census Bureau, a Profile of U.S. Impor#ng and Expor#ng Companies, 2009-‐2010

Figure 3. Small-‐ and Medium-‐Sized Enterprise Share of Total U.S. Goods Exports, 2000 -‐ 2010

SMEs Increasing Share of U.S. Exports

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We SCll Have a Ways to Go!

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The Export PromoCon Cabinet, July 2012

To Maximize the EffecCveness of Federal Programs, the Federal Government will:

(1) increase the na#onal base of small-‐ and medium-‐ sized enterprise exporters by 50,000 by 2017,

(2) expand the reach of federal export assistance and counseling to small businesses, and

(3) ensure beYer delivery of export promo#on services domes#cally and overseas.

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U.S. Global Business SoluCons Export Promo#on Cabinet, Objec#ve #2:

Expand Access to Small Business Trade Financing 1) trade financing perceived as too complex by

many lenders 2) not high volume nor profitable for lenders

1) reduce the complexity and present a streamlined package of financing op#ons, 2) focus only on mainstream products with greater volume poten#al

Problem

SoluCon

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One-‐Stop Shop for Business Export Needs Goals •  Grow revenues and jobs through exports and the number of SB

exporters—add 50,000 by Dec. 2017 •  Expand the base of financial ins#tu#ons and service providers who

facilitate exports—add 250 trade financing originators by Dec. 2015

SoluCon •  Reduce complexity by packaging trade financing and marke#ng

op#ons that seamlessly meet exporter needs •  Simplify marke#ng materials and increase outreach and training to

meet the needs of their financial ins#tu#ons •  Streamline access to interna#onal experts, credit products, and

business services for exporters—increase volume

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One-‐Stop Shop for Business Export Needs Strategy •  Combine key trade and commercial finance products and

services in a single menu of op#ons made for mainstream use: U.S. Global Business SoluCons

•  Tailor the op#ons to the stage of exporter development and capacity of the financial ins#tu#on or service provider

•  Offer a seamless, low-‐cost transi#on among op#ons

•  Provide a menu of customized financing solu#ons for more advanced exporter needs: The Specialized Global SoluCons (SGS) program

How Do We Get More SMEs Here?

Source: hYp://www.medica-‐tradefair.com/cgi-‐bin/md_medica/custom/pub/content.cgi?lang=2&oid=28126&#cket=g_u_e_s_t&ca_page=en%2Facquisi#on_brochure.html

How Do We Get More SMEs Here?

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U.S. Government Help for U.S. Exporters Trade Services Trade Finance

InternaConal Trade Specialists Trade Finance Specialists •  110 Offices across the U.S. •  Embassies in 70 countries, hundreds of

consulates

•  40 Trade Finance Specialists in 22 loca#ons

Trade Services Trade Finance Programs

•  Export Business Counseling •  Foreign Market Research and Buyer

Intelligence •  Finding Foreign Buyers •  Mee#ng with Visi#ng Foreign Buyers •  Trade Shows and Trade Missions

•  Purchase Order Financing •  General Export Expenses •  Receivables and Inventory Financing •  Country and Buyer Credit Insurance •  Equipment and Real Estate Financing

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What Might a SME Need?

Working Capital for Export Development:

•  AYend trade shows

•  Secure CE mark, interna#onal patent or trademark

•  Meet poten#al business partners

•  Vet poten#al buyers, agents or distributors and purchase foreign credit reports

•  In-‐country promo#ons

•  Transla#on of website/product literature and other marke#ng costs

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What Might a SME Exporter Need?

Working Capital and Credit Insurance for Export Orders:

•  Inventory, materials, labor, other produc#on costs

•  Foreign accounts receivable insurance

•  Insurance and freight costs

•  Bank fees related to the transac#ons

•  Standby-‐leYers of credit to guarantee bid, performance, or advance payments

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What Might an Experienced SME Exporter Need?

Term Loan for fixed assets:

•  Machinery or equipment to expand produc#on in order to meet foreign demand

•  Retooling expenses necessary for metric produc#on or to meet other standards

•  Permanent working capital

•  Real estate needed as a result of expanding export sales

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New Market and Buyer Development Products Export Finance Products

Expo

rt Strategy

Developm

ent USEAC Counseling

-‐  Consult with a trade specialist who knows your industry.

-‐  Target key markets and develop entry strategy. -‐  (Refer non-‐export ready firms to SBA local

resource partners.)

ProtecCo

n Ag

ainst Non

-‐Pa

ymen

t

Express Trade Credit Insurance -‐  Covers non-‐payment risks of foreign buyers -‐  Coverage is up to 95% of invoiced amount of foreign

receivable. -‐  Pay-‐as-‐you-‐ship premiums

Find

ing Pa

rtne

rs and

Buyers

InternaConal Buyer Program -‐  Exhibit at major domes#c industry trade show -‐  Sign up to meet foreign buyers at the show -‐  Inexpensive way to meet foreign buyers/partners

WORK

ING CAP

ITAL

LOAN

S

$500,000 and

less

Loan

Gua

rantee Export Express

-‐  Export development and transac#onal costs

-‐  Working capital to 7 years -‐  Equipment and real estate to 25 years

InternaConal Partner Search -‐  Find a business partner in targeted country -‐  Send product literature and US gov’t staff

overseas iden#fies poten#al foreign buyers Direct Loa

n to Exporter Global Credit Express

-‐  6 or 12 month maturity -‐  Supports general expenses and working

capital needs

$500,000 to

$5 Million

Expo

rt Related

Co

llateral O

nly Export Working Capital Guarantee

-‐  Transac#onal (purchase order) or asset-‐based

-‐  90% guarantee -‐  1-‐yr. term typically; 3-‐yr. max maturity

Reverse Trade Missions -‐  Meet delega#ons of foreign buyers with funded

infrastructure projects -‐  Learn more about overseas projects and sales

poten#al

GOLD KEY -‐  Travel overseas to meet poten#al business

partners -‐  Have U.S. government staff screen poten#al

partners -‐  Assistance at on the ground mee#ngs Do

mesCc and

Expo

rt Collateral CAP Line 7(a) Loan Guarantee

-‐  Supports both domes#c and foreign sales cycles

-‐  Includes insured foreign A/R in borrowing base

-‐  75% guaranty; 10 year max.

Int’l Trade Shows/ Trade Missions -‐  USG hosts USA pavilions at major interna#onal

shows -‐  USG organizes trade missions to introduce US

companies to pre-‐screened partners TERM

LOAN

S InternaConal Trade Loans -‐  Insourcing or expanding produc#on facili#es -‐  Up to $5M with 90% guarantee -‐  Max maturi#es of 10 for working capital and 25 years

for real estate

Vecng

Custom

ers

InternaConal Company Profile -‐  Background checks on poten#al business partners -‐  Customized report on ac#vity and reputa#on of

firm

Help W

ith

Major Overseas

Projects

Bid and Performance Bonds -‐  Supports standby leYers of credit to guarantee

advance payments -‐  Supports standby L/C s serving as bid and /or

performance guarantees -‐  Requires only 25% cash collateral

HIGH

Export M

atchmaking

LOW

HIGH

Expo

rter Sop

hisCcaCo

n

LOW

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Early Stage Exporter Trade Counseling (CS)

Guides U.S. companies through the export process from beginning to end, helping to develop an effective international sales strategy, identify and comply with laws and regulations, fulfill documentation requirements, and overcome trade problems.

InternaConal Buyer Program (CS)

Provides export counseling to U.S. companies and connects them with pre-screened potential buyers, sales representatives, and business partners at major U.S. International Buyer Program-designed domestic industry trade shows.

InternaConal Partner Search (CS)

Provides U.S. companies with a report that helps determine the marketability of their products or services, identifies pre-screened potential export partners, and includes detailed overseas company information.

Reverse Trade Missions (USTDA)

Organizes visits to the United States for foreign delegates to observe the design, manufacture, demonstration, and operation of U.S. goods and services that may help them achieve their development goals.

Trade Missions or Trade Shows (CS)

Enables U.S. companies to exhibit products at overseas Certified Trade Fairs or participate in US-organized trade missions, receive customized market briefings, and meet potential business partners.

Express Insurance (Ex-‐Im)

Covers non-payment risks, allowing firms to extend competitive credit terms to foreign buyers and increase cash flows. Coverage is up to 95% of invoiced amount of foreign receivable.

Export Express (SBA)

Finances the exports of new exporters and businesses that are expanding their current foreign markets. Up to $500k, 75-90% guarantee, 25 year max. term financing for any export development activity, including trade show attendance, equipment and export sales; 7 year max. term for working capital. Under a general line of credit, 30% of the line can be used to support domestic activity.

CapLines (SBA) Provides businesses with a line of credit that supports both domestic and foreign sales cycles (including insured foreign A/R) and cyclical working capital needs.

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Experienced Exporters Gold Key (CS) Organizes one-on-one meetings with pre-screened potential buyers, sales representatives, and

business partners when visiting overseas markets or at overseas trade shows.

InternaConal Company Profiles (CS)

To assess potential export partners, these reports contain available sales, profit figures, potential liabilities, and other financial information, and are prepared by trade professionals working in target markets.

Global Credit Express (Ex-‐Im)

Provides businesses with short-term, direct working capital loans of up to $500,000. Six or twelve month revolving line of credit that supports general expenses of exporting as well as the full range of working capital needs.

Export Working Capital (SBA)

Transactional or asset-based lines of credit up to $5MM with 90% guarantee, typically for a 1 year term with 3 year maximum maturity, to support export transactions from purchase order to collections.

InternaConal Trade Loan (SBA)

Insourcing or expanding facilities for firms growing their exports or adversely impacted by imports. Up to $5MM with 90% guarantee; maximum maturities of 10 years for working capital or 25 years for real estate.

Trade Credit Insurance (Ex-‐Im)

Covers non-payment risks, allowing firms to extend competitive credit terms to foreign buyers and increase cash flows. Coverage is up to 95% of invoiced amount of foreign receivable.

CapLines (SBA) Provides businesses with a line of credit that supports both domestic and foreign sales cycles (including insured foreign A/R), and cyclical working capital needs.

Bid/Performance Bonding (SBA)

Provides a guarantee of performance under contracts with foreign buyers or guarantee on advance payments, currently through the use of standby letters of credit which both the Export Express and Export Working Capital loan programs can support.

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Specialized Global Solu#ons Agricultural and Forest Products

USDA’s Export Credit Guarantee Program (GSM-‐102) guarantees credit extended by the U.S. private banking sector to approved foreign banks to encourage financing of commercial exports of U.S. agricultural products.

Feasibility Studies USTDA Feasibility Studies link foreign project sponsors with U.S. businesses at the early stage of project development when technology op#ons and requirements are being defined. These studies evaluate the technical, financial, environmental and other cri#cal aspects of infrastructure development projects.

Medium-‐Term Buyer Finance

Ex-‐Im’s Medium-‐Term Credit Insurance protects sale of capital equipment or related services to a single foreign buyer against the buyer's failure to pay due to unforeseen commercial or poli#cal reasons.

Export Working Capital Guarantee

Working Capital Guarantee provides commercial lenders with a 90% loan guarantee to facilitate mul#ple export sales or individual contracts for goods or services

Foreign Direct Investment Assistance

OPIC provides financial products, such as loans and guaran#es; poli#cal risk insurance; and support for investment funds, all of which help American businesses expand into emerging markets.

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USDA GSM-‐102 Export Credit Guarantee Program

• Guarantees against non-‐payment • U.S. agricultural commodi#es only • LeYer of credit required • Covers non-‐bulk commodi#es in addi#on to bulk commodi#es • Up to 2 year tenor

Jonathan Doster 202.720.2074

[email protected] www.fas.usda.gov/excredits/ecgp.asp

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U.S. Trade Development Agency Feasibility Study Program

• USTDA provides grants to foreign project sponsors to select U.S. companies to complete project development/prepara#on ac#vi#es required for major infrastructure investments. • The Feasibility Study Program links foreign project sponsors with U.S. businesses at the cri#cal early stage of project development. • Feasibility Study Analysis includes: o Technical o Financial o Legal o Environmental o Life Cycle Cos#ng

Andrea M. Lupo Assistant Director for Policy and Program, USTDA

703-‐875-‐4357 [email protected]

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Export-‐Import Bank—Medium-‐Term Guarantee Program •  DESCRIPTION: A loan guarantee to a lender that finances a foreign buyer’s purchases of

U.S – made capital equipment and any related services. •  BENEFITS: Enables an exporter to sell large #cket capital equipment to a foreign buyer

on credit terms generally between 1 and 5 years and be cashed-‐out up front by a lender. The buyer is able to access credit at U.S. interest rates.

•  HOW IT WORKS: Applica#ons are submiYed by par#cipa#ng lenders, generally providing the buyer’s most recent 3 years’ financial statements and their own credit memo. If approved, the guaranteed amount is 100% of the financed por#on (less the down-‐payment).

•  ELIGIBILITY: Products must be of U.S. origin. Buyer must make a minimum 15% cash down-‐payment.

•  COST/FEES/TERMS: There is a variable exposure fee based on the risk of the transac#on and a commitment fee of 0.125%. The interest rate is nego#ated between the lender and the foreign borrower.

•  RESTRICTIONS: Lenders must have a Master Guarantee Agreement in place to par#cipate. Goods and /or services exported must be of U.S. origin. Military and / or defense related items or buyers may be ineligible. Eligible countries are listed on the Country Limita#on Schedule.

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Export-‐Import Bank—Working Capital Program •  DESCRIPTION: A loan guarantee for an exporter to purchase finished goods, raw materials,

labor and fund overhead costs to fulfill export sales orders or to post a bid or performance bond. Exporter may sell to goods directly to a foreign buyer or to a company in the U.S. which will then export the products (“indirect exports”).

•  BENEFITS: The guarantee encourages a lender to make a loan when they might not otherwise do so. Offers generous advance rates (up to 75% on inventory, which includes work-‐in-‐process, and up to 90% on foreign accounts receivable).

•  HOW IT WORKS: Applica#ons from exporters are reviewed by the lender and either approved under their own “delegated authority” or sent to an underwri#ng unit for concurrence. Loans may be revolving lines of credit or transac#on-‐specific. The guarantee is 90% of the loan amount.

•  ELIGIBILITY: Company must be in business for at least one year with financial statements available on its opera#ons. Goods and /or services exported must be of U.S. origin.

•  COST/FEES/TERMS: $100 processing fee. 1.75% annually, 1.25% available on a case-‐by-‐case basis for lower-‐risk transac#ons. Interest rate on the loan and any other fees are set by the lender.

•  RESTRICTIONS: Goods and /or services exported must be of U.S. origin. Military and / or defense related items or buyers may be ineligible. Eligible countries are listed on the Country Limita#on Schedule.

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Overseas Private Investment Corpora#on •  Financial products to facilitate direct foreign investment. •  Long-‐term project financing , if there is: a) meaningful US ownership in

the enterprise, or b) a long-‐term contractual agreement between a US firm and the foreign enterprise.

•  Insurance to protect against losses on overseas assets from poli#cal violence, government interference and currency conversion and transfer.

•  As the U.S. Government’s Development Finance Ins#tu#on, OPIC focuses on emerging markets and offers its programs in over 150 countries.

Alison Germak Gatchev Director, Corporate Development Small & Medium Enterprise Finance

OVERSEAS PRIVATE INVESTMENT CORPORATION 1100 New York Ave, NW | Washington DC 20527 +1 202.336.8651|[email protected]|

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You Can Help Your Clients Who Export or Want to Export

Don’t let them go to another bank!

•  With U.S. Global Business Solu=ons (U.S. GBS), you can provide the full range of trade finance products and export services to your customers– backed by the federal government.

•  Market U.S. GBS with the U.S. Government or use your own brand.

•  Get a single Trade Specialist as point of contact for all U.S. GBS programs, elimina#ng the need to have contacts in each agency

•  Easily integrate export credit facili#es with client’s domes#c credit facili#es

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You Can Help Your Clients Who Export or Want to Export

•  Use sales materials designed by U.S. GBS, combined with a decision tree, that lets you customize a menu of programs to each client’s needs

•  Access a unique, Web landing page for addi#onal informa#on on

each program to use for quick reference

•  Benefit from addi#onal sources of client originaCon, because of the training provided to a wide range of agency resource partners on US-‐GBS

•  Become a U.S. GBS partner: in-‐depth training can be provided on the programs of your choice along with the delivery of tailored marke#ng materials

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1.  Training in all the products and services under the U.S. Global Business Solu#ons program.

2.  Template for marke#ng materials to be used in promo#ng U.S. GBS products and services to your customers.

3.  Use of the U.S. GBS brand (as long as you are is ac#vely promo#ng the Program).

4.  Provide one primary U.S. government contact for follow-‐up ques#ons and support in promo#ng the Program.

What we will provide to Partners

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1.  Receive training on all the products and services under the U.S. Global Business Solu#ons program.

2.  Offer financing solu#ons to small business exporters on:

•  Export working capital •  Term loans for facili#es expansion •  Referrals for credit insurance

3.  U#lize marke#ng materials designed for the Program 4. Execute all necessary guaranty agreements 5.  Make referrals of businesses for Global Credit Express and

Credit Insurance

What We Expect from Our Partners

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U.S. Global Business Solu#ons Timeline

Apr. -‐ Nov. 2013

•  Iden#fy pilot lenders and launch pilot

April-‐Nov. 2013

• Provide training to lenders, CS, intermediaries, SBDC, MEPs, etc.—soy launch, then ongoing.

Dec. 2013 • Refine product and marke#ng materials

Jan. 2014

December 2015

• Sign 250 new lenders to provide trade financing to SMEs

§  Finalize training and marke#ng materials for early 2014 na#onal launch

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Ques#ons Primary Contacts:

Dennis R. Chrisbaum, SBA [email protected]; 202.205.6885 Charles D. Tansey, Ex-‐Im Bank [email protected]; 202.565.3701

Education

Global Business Solutions (GBS) by Dennis R. Chrisbaum