As the U.S. Congress packed up and left the chambers July 1 for the annual vacation, they took their power to extend funding of the Export-Import Bank (EXIM) along with them. As a result, EXIM was defunded. Existing agreements — loans, guarantees, and insurance policies — will be honored, but EXIM cannot initiate new transactions.
EXIM In A Nutshell
In EXIM’s 81-year history, small businesses that export goods relied on them to grease the wheels on both sides of foreign transactions. EXIM’s main function was to provide loans and credit insurance to small banks, enabling these banks to offer accounts receivable financing to small businesses — and to compete with the banking behemoths operating from offices all over the world.
Small exporters sold unpaid invoices (and their risk) to EXIM and, in exchange, received a percentage of their value. EXIM also financed foreign buyers of domestic goods and issued performance and bid bonds.
The overall goal was to help small businesses — which made up 90% of EXIM bank customers — continue exporting their goods, ultimately helping to tip the U.S. trade balance back in our favor.
What EXIM’s Exit Means For You
Congressional battling over this hasn’t ended; members essentially declared a cease-fire until recess is over. Even if Congress votes to re-fund EXIM late this fall, many existing contracts between exporters and EXIM will have run out. If you’ve been relying on EXIM to keep your cash flowing, the federal funding well has just dried up.
You’re not left high and dry, however. There are other sources of foreign accounts receivable credit besides the government — and National Factoring Group can help you find them.
How National Factoring Group Fills The Gap EXIM Left Behind<?
If your business has outstanding invoices from foreign buyers, NFG can link you with factors who are eager to take them over. Making this change can be advantageous:
- While large banks typically pay 70 cents on the dollar of accounts receivables, our factors typically offer 80 to 85. That equates to 10 to 15 percent more working capital in your hands than you’d wind up with if you go with the big banks.
- You can maintain your relationship with your current bank for all of your domestic transactions, while still using our factors for your international ones.
- When using our platform, you have the unique opportunity to compare factoring companies’ proposals side-by-side. You know all of your fees upfront and can make the right choice for your business.
- Bottom line: NFG can turn your outstanding international invoices into the cash you need to keep your export business running and growing — and give you more of it, to boot. That’s good for your business and good for our economy.
Photo Credit: Daniel Hoherd. Taken: July 13, 2008