Letter of Credit Basics Seminar

Foreign Receivable Financing Programs

Davi TserpelisSenior Vice PresidentCommercial Banking

davi.tserpelis@citi.com – 631-265-4484

Objective

Provide an overview of government sponsored lending

programs available to support cash flow for exporters

– Small Business Administration

SBA Export Working Capital Program

– Export – Import Bank of the US

EXIM Working Capital Guarantee Program

EXIM Medium-Term Guarantee Program

EXIM Long-Term Guarantee Program

EXIM Financial Institution Buyer Credit Program

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Export Working Capital Programs:Who do they support?

Programs are primarily for small and medium-sized

businesses that are U.S. domiciled exporters

Company is a manufacturer, trading company, wholesaler,

distributor or a service company

Qualifying businesses:

– SBA products- determined by an entity’s industry (NAICS code)

and either number of employees or Annual Receipts (in millions)

– EXIM products – determined by EXIM Country Limitation

Schedule and US content requirements

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Export Working Capital ProgramsCommon qualifying business purpose usage

Finance of foreign accounts receivable

Acquire inventory for export or to be used to manufacture goods for export

Pay the manufacturing costs of goods for export

Purchase goods or services for export

Support standby letters of credit related to export transactions

Working capital directly related to export orders

Support an indirect export. (The borrower’s direct customer is located in the United States and his customer is overseas)

Goods must be shipped from the USA

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EXIM Working Capital Program Standard Structure Basics

Facility Size $1,000,000 minimum

Up to 90% against foreign receivables up to 180 days old

(depending on credit insurance) and up to 75% against

export related inventory

Typically a one year annually renewable credit line

Monthly borrowing base certificate

Fees vary

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Working Capital Guaranty Programcore benefits

Enable clients to grow their export business

Enable clients to borrow against foreign accounts receivable

and inventory typically not conventionally financed

Higher leverage and advance rate than conventional

financing with government guarantee

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Determining which product is the best fit: EXIM’s WCGP vs. SBA EWCPDescription EX-IM Bank WCGP SBA EWCP

If product does not meet 50% US content No Yes

Products manufactured abroad 100% No Yes, must be shipped from the USA

Defense product or defense customers; No Yes, subject to Citi ‘s credit policy

Transaction Specific ( large contract 1-3 buyers)

Yes No

90 % advance rate of foreign A/Rs Yes, dependent on underwriter Yes, dependent on underwriter and foreign receivable insurance requirements

A/R credit insurance required Typically, no, only required in some cases by underwriter Yes, but can be mitigated with three or more years of documented positive buyer experience, only 80% advance

rate on A/R’s without insurance

Use of proceedsTo acquire inventory and pay for productions costs; To purchase goods for resale; Delivery

of services;To support stand-by letters of credit with

reduced (25%) collateral.

Yes Yes

Loan max Unlimited $5 MM

Loan minimum 1MM 1MM

Fees Application Fee, Facility fee depends on term of loan:

6 months: .75% of loan amount12 months: 1.50% of loan amount

(The facility fee is reduced if 100% of the borrower’s A/R are either insured or covered by a letter of credit.) or if borrower meets industry medium quartile for

4 out of 7 key ratios

SBA charges a guaranty fee of .25% per year

Interest rate Negotiable with lender Negotiable with lender( should include ongoing fee)

Requirement to use outside counsel Yes, only certain approved EXIM lawyers No, unless required by underwriter

Field examinations required Yes, semi-annual at borrower’s cost, annual with audited financials No, (but subject to Citi’s underwriting requirement )

Monitoring of borrowing base Yes Yes

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EXIM Medium-Term/Long-Term Guarantee Program Overview

Term loans for your client to purchase large ticket items from your Company wherein bank

has a local presence

Finance refurbished items, construction cost, computer software, engineering cost and

some local overseas cost, etc

No defense articles or services, or military buyers and shipped from US

Buyer must be in an eligible country according to EXIM Country Limitation Schedule and

bank

Buyer must be in business for at least three years and able to provide current financial

statements and three years of audited financial statements

Finance up to 85% of the purchase price or the US content, whichever is less

Finance term between 2 and 5 years for Medium Term and 5-10 for

Long Term

Minimum $1,000,000

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Financial Institutional Buyer Credit (FIBC) Program

Allows bank to lend to a foreign buyer of US goods and services on a short-term basis

backed by insurance

This policy affords coverage against commercial defaults and political events that

result in nonpayment under a buyer obligation.

The policy also provides coverage against political risks such as war, revolution,

expropriation or confiscation by a government authority, cancellation of import or

export licenses after shipment and foreign exchange inconvertibility, and commercial

losses due to protracted default, insolvency of the buyer or failure to reimburse for

other reasons. Devaluation is not covered.

Political only coverage is 100%;

Non-sovereign obligors/guarantors, including non-sovereign public sector and private

sector financial (non-letter of credit) and non-financial institutions is 90% coverage;

and

Approved agricultural commodities are covered at 98%

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How the Lender will support you…

Citibank is a preferred lender of programs

Educate Company on products and identify best product for Company Help qualify Company for program and process loan request including application completion and underwriting

Process Bank and Government Agency Approval

Ensure that government agency is notified of loan closing

Service relationship and present other complimentary solutions (ex. trade credit, foreign exchange, international banking)

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© 2012 Citigroup Inc. Citibank, N.A. Member FDIC. Citi with Arc Design is a registered service mark of Citigroup Inc. Citigroup is an equal credit opportunity lender. Fees and conditions apply to certain of these products and services. Please contact your Citibank representative for the specific terms that apply to each product and service.All banking, commercial loans and credit lines are provided by Citibank, N.A. (Citibank), an equal opportunity lender, or its banking or lending affiliates. All credit products are subject to satisfaction of Citibank’s underwriting guidelines and credit approval. Fees and conditions, Including minimum balances, apply to some deposit and other products and services described. Treasury products are made available through Citibank. Subject to credit approval. Citibank is an equal credit opportunity lender. Offer subject to change or termination at anytime without notice, and cannot be combined. The terms, conditions and fees for accounts, products, programs and services are subject to change. All accounts and services are subject to approval .

Thank You For your Time Today Davi Tserpelis

Senior Vice-President Commercial Banking

631-265-4484davi.tserpelis@citi.com

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