| U.S. EXPORT FINANCE HAS CHANGED DRAMATICALLY since the mid-1990s -- the result of consolidation in the banking sector, global expansion of trade credit insurers, the launch of specialty finance companies (mostly by ex-bankers), and the rise of the Internet. For examples of organizations in each of these trends, see Small Biz Lenders and Small Biz Services. LENDERS Consolidation has reduced the number of U.S. banks from over 14,000 in the 1980s to about 8,000 in 2009. That has created a challenge for smaller and mid-size exporters, who in the past often found local banks to work with, or at least banks in nearby cities. Now, some lenders, in becoming larger, have made exports a lower priority, and some have raised the minimum size requirement in equipment deals, putting that service beyond the reach of smaller firms. On the positive side, a number of lenders with a presence in multiple states have built a special relationship with the Export-Import Bank that permits rapid approval of working capital transactions. Exporters can turn to them for that service. And, a few banks now support equipment export deals on a “transaction” basis, which means they do not require an ongoing relationship with the exporter. They work with exporters nationwide, and actively use Ex-Im Bank medium-term guarantee and insurance programs. Finance companies, meanwhile, are increasingly active and visible in both short-term working capital lending and medium-term equipment deals. They include a few large groups with diversified domestic and export portfolios, and at least a dozen smaller trade finance specialty groups. Several finance companies provide short-term working capital in conjunction with purchase order finance, while those in equipment export support typically work with Ex-Im Bank programs. INSURERS Credit insurance is one of the fastest growing parts of export finance. U.S. exporters currently work with ten insurers. Three are based in the U.S., three are European “transplants” with a large U.S. presence, while the others’ headquarters are in the UK, Europe, Australia, and Bermuda. The proliferation of insurers has brought expanded capacity, additional underwriting styles and more choices. Short-term multi-buyer policies are the main product, but key buyer and single buyer policies are increasingly popular. Private insurers offer some medium-term (3-5-year terms) coverage, but the Export-Import Bank remains the big provider in that product. INTERNET The Internet has brought far reaching changes throughout U.S. export finance. Most commonly, exporters now communicate with their banks and insurers online, in processing applications, sending documents, tracking transactions, updating information, and qualifying buyers. Benefits include speeding up transactions, boosting efficiency (paperless information, fewer mistakes), and reducing risk. Banks remain the major players, but independent technology-based trade finance groups are now increasingly visible. They provide software and systems that underpin the transactions, then bring in banks to move the money and inject credit. Transactions are increasingly automated through programs that match purchase orders and invoices, and trigger payments, credit, and insurance. The Internet has also created quick access to large databases with company information, which speeds up transaction processing, reduces risks, and enhances visibility. |
Who’s Offering What Ex-Im Bank Lenders Roster is available for Fiscal 2007 (the 2008 edition will be ready in late July). Lists banks and finance companies that worked with Ex-Im in 2007, provides brief profiles of each institution and its export finance activities. Available in PDF format, sent by e-mail. Price: $12.50. Checks only. Contact IBAC: Phone 301-907-8647, e-mail: exportfinance@verizon.net. Looking for a lender, insurance broker or arranger? IBAC can help through its network. Contact us at 301-907-8647, e-mail us at exportfinance@verizon.net. |
