May 14, 2021

Volume XI, Number 134

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The Export Import Bank of the United States: Priorities and Programs Supporting U.S. Businesses and Jobs

The Export Import Bank of the United States (EXIM) issued its 2020 annual report highlighting EXIM’s results and priority initiatives in its mission to support American jobs by facilitating the export of U.S. goods and services. EXIM, an independent federal governmental agency, is authorized by Congress until 2026 to maintain $135 billion of credit exposure. Through direct loans, guarantees, credit insurance, and supply chain financing support, EXIM finances U.S. exporters and suppliers that cannot arrange export financing from private sources without EXIM’s credit support. EXIM also provides foreign buyers of U.S. goods and services with credit support so U.S. exporters can be competitive, even in the current environment where foreign credit agencies, such as those from the People’s Republic of China, support foreign competition in overseas markets. 

Key Tests for EXIM Financing

To be eligible for EXIM financing, an assessment must be made that EXIM financing fosters additional exports (called “additionality”) – in other words that the transaction is unlikely to proceed without EXIM support. Further, the goods and services being exported have must be “made in the U.S.A.” as tested by having adequate U.S. content as measured under the guidelines. The EXIM financing cannot have a negative economic impact on domestic industries. Finally, there are identified countries where EXIM financing is unavailable.

Congressional Mandates

EXIM reported its results under several Congressional mandates:

  1. Small Business Mandate. Effective Jan. 1, 2021, the mandate for EXIM to finance small businesses rose from 25% to 30% of EXIM’s aggregate loan, guaranty and insurance authority. About 90% of the number (and almost 39% of the guaranty authority) of authorizations in 2020 directly supported small businesses.

  2. Program on China and Transformational Technologies Mandate. In FY 2020, EXIM established a new Program on China and Transformational Exports with a mandated 20% total financing authority ($27 billion of the $135 billion). The program is designed to neutralize China’s subsidies and establish U.S. leadership in certain technologies.

    The transformational technologies to be supported through the China Program are: artificial intelligence, biotechnology, biomedical sciences, wireless communications equipment, quantum computing, renewable energy, energy efficiency, and energy storage, semiconductor and semiconductor machinery manufacturing, emerging financial technologies and related technologies, water treatment and sanitation and related technologies and infrastructure, high-performance computing, and related goods and services.

  3. Environmentally Beneficial Goods and Services Mandate. EXIM supports U.S. exports of renewable-energy equipment, wastewater-treatment projects, air-pollution technologies, waste-management services, and other environmental goods and services. In FY 2020, EXIM authorizations of environmentally beneficial goods and services totaled $92.6 million (approximately 1.7 percent (1.7%) of EXIM’s FY 2020 authorizations).

  4. Sub-Saharan Africa Mandate. In FY 2020, EXIM authorized $137 million for a total of 69 transactions in support of U.S. exports to the region. One project highlighted in EXIM’s annual report was the export of design, engineering and construction services for a rural electrification project in the Republic of Senegal; a small business based in Illinois with fewer than 20 employees will export U.S. goods and services (some contracted through a large U.S. supplier), and in so doing will support an estimated 500 jobs in 14 states.

EXIM also reported that during 2020:

  • EXIM’s credit authorizations in 2020 supported an estimated 37,000 American jobs.

  • The Board approved new guidelines to determine “additionality” -- the likelihood that a transaction would not go forward without EXIM support.

  • The board voted to establish a new narrowly-tailored 51% content policy (how much of the export content is made in the U.S.A.) specific to the China Program.

  • EXIM reported on several COVID-19 related initiatives including:

    • A new Bridge Financing Program to meet the demand for financing of U.S. exports as economic conditions remain uncertain.

    • EXIM’s guarantee temporarily increased from 90% to 95% under its Supply Chain Finance Guarantee Program and Working Capital Guarantee Program.

  • By the end of FY 2020, there were 92 lenders participating in the EXIM working capital loan guarantee program to finance U.S. exporters.

Export financing and supply chain financing help drive the success of U.S. exporters and suppliers. EXIM’s financing initiatives promise to facilitate U.S. business and even the playing field against foreign competitors. Congress has made a historic commitment to EXIM’s role and mandated EXIM to provide significant credit support of up to $135 billion. Businesses are encouraged to learn more and take advantage of EXIM’s credit support programs.

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© 2021 Foley & Lardner LLPNational Law Review, Volume XI, Number 124
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About this Author

Jamie N. Class Partner Boston Finance Corporate Bankruptcy & Business Reorganizations
Partner

Jamie N. Class is a partner and business lawyer with Foley & Lardner LLP. She advises clients in structuring, negotiating and closing debt financing transactions and restructurings. Jamie has more than 20 years’ experience representing US and global clients as issuers of and investors in debt instruments in a broad variety of debt financing and restructuring transactions.

Jamie is skilled at working with multiple parties to close syndicated secured and unsecured credit facilities, private placements and public offerings of securities, second lien notes, tender offers, exchange...

617-226-3111
Associate

Jacob R. Adams is a business law associate in Foley & Lardner LLP's Boston office and a member of the firm’s Finance Practice.

Prior to joining Foley, Jacob worked as associate counsel, assistant vice president of State Street Corporation where he managed, drafted, and executed filings with the SEC and NYSE including registration statements, correspondence, supplements, Forms 8K, 10K, N-CSR, N-PX, proxy statements, information statements, tender offers and fidelity bonds. He advised clients including investment fund complexes, ETFs, and business development companies. Before...

617-342-4025
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