L.A. exporters gain greater access to financing.

Ex-Im Bank's move to Long Beach facilitates trade

When the West Coast Regional Office of the Export-Import Bank of the United States moved to the U.S. Export Assistance Center in Long Beach last August, it gave local export companies a one-stop financing center.

"Our mission is to create jobs through export," said Jerri Slifer, regional director of the bank's West Coast Regional Office. "We assist businesses to increase exports by getting financing assistance."

The Export-Import Bank, also known as the Ex-Im Bank, is an independent federal agency created during the Great Depression to the aid the country's economic recovery by increasing foreign trade. While the Ex-Im Bank does not directly loan money to U.S. export companies, it helps exporters secure loans from private-sector lenders. It accomplishes this by issuing loan guarantees to lenders willing to make loans to U.S. exporters and by providing export credit insurance to U.S. exporters, protecting them against non-payment by foreign buyers. The Ex-Im Bank also provides direct loans to overseas buyers of U.S. goods and services.

For the last five years, the bank's West Coast Regional Office - which serves 12 states and the U.S. Pacific Islands - has been located in Los Angeles County. The bank has four other regional offices - located in Chicago, Houston, Miami and New York.

Last year, the bank moved from its Hollywood offices to Long Beach to join other federal agencies involved with U.S. trade issues. These agencies include the U.S. Department of Commerce, Small Business Administration and U.S. Agency for International Development.

Federal consolidation

The move to Long Beach was part of the national export strategy introduced by the Clinton administration some 18 months ago, which specified that all local offices of federal agencies responsible for U.S. trade-related matters should be located in export assistance centers. There are currently 12 export assistance centers sprinkled around the country, including the one in Long Beach. The Ex-Im Bank brought its West Coast Regional Office to Long Beach last summer, when its Hollywood lease expired.

Of the $15 billion in financing support in the form of loans to foreign buyers, credit insurance and loan guarantees authorized through The Export-Import Bank in 1994, more than $1 billion were issued to California exporters, according to bank spokeswoman Linda Formella.

Services provided by the Ex-Im Bank include:

* working capital guarantees covering 90 percent of the principal and interest on commercial loan proceeds secured to buy or produce goods or services for export;

* export credit insurance policies protecting against the political and commercial risks of a foreign buyer defaulting on payment;

* guarantees of commercial loans to foreign buyers of U.S. goods or services covering 100 percent of principal and interest against both political and commercial risks of nonpayment;

* direct loans to foreign buyers for their purchases from U.S. exporters.

California has more customers with working capital guarantees from Ex-Im Bank than any other state in the nation. Last year, the bank authorized well in excess of $50 million in guarantees to lenders for California export companies. That was almost double the amount authorized the year before, when $27.6 million in guarantees were issued by the Ex-Im Bank to California exporters.

The majority of the bank's West Coast customers are small businesses with 500 employees or less, said Slifer.

Small-business focus

The dramatic increase in guarantees to California exporters coincided with a massive effort on the part of the Ex-Im Bank to reach more small-business exporters by providing improved services, such as increasing the dollar amount of Ex-Im Bank's loan guarantees for smaller exporters. These small companies are most interested in obtaining working capital guarantees and export credit insurance, Slifer explained.

Working capital guarantees are geared for small and medium-sized export firms. Such guarantees are usually obtained before the company has set up its export operation and can be used to secure financing for pre-export activities, such as purchasing inventory or raw materials.

Ex-Im Bank provides these guarantees to small businesses through a joint program with the U.S. Small Business Administration. The SBA works with small businesses to provide letters of credit guaranteeing 90 percent of loans up to $833,334. Ex-Im Bank offers guarantees for 90 percent of loans exceeding that amount, with no maximum loan amount, Slifer explained.

Guarantees may be for a single loan transaction or a revolving line of credit.

Last year, Ex-Im Bank authorized a working capital revolving line of credit to help Flowing Corp. of San Rafael, Calif. sell $29 million worth of wind energy equipment and technology to India, said Formella, speaking from Ex-Im Bank's Washington, D.C. headquarters.

While business owners are free to apply directly to Ex-Im Bank for loan guarantees, it is better for them to work with a private-sector bank which can apply to Ex-Im Bank on the borrower's behalf, explained Slifer.

"Banks know the exporters better than we do," said Slifer.

Lenders experienced with Ex-Im Bank can obtain delegated authority to commit Ex-Im Bank's guarantees.

The Ex-Im Bank export credit insurance policies are also popular with local exporters.

Default coverage

These policies protect against the default of a foreign buyer for either single or repeat export sales and leases. Short-term policies are used to support the sale of consumer goods, raw materials and spare parts on terms of up to 180 days, and bulk agricultural commodities, consumer durables and capital goods on terms of up to 360 days. These policies often cover 100 percent of the principal for political risks and 90 to 95 percent of the principal for commercial risks. Medium-term policies insure capital goods for up to five years and cover 100 percent of principal and interest on the financed portion.

Proceeds from the payment of claims from either of these policies can be assigned to private lenders. This allows exporters to finance receivables more readily, said Formella.

While Ex-Im Bank is currently courting small business owners with their programs, it does not restrict its financing activities to them. The West Coast Regional Office's biggest customers in recent years have been aerospace giants. In 1995, Ex-Im Bank's local office provided Seattle-based Boeing Co. with $989 million in loans and loan guarantees. And in 1994, the local office authorized $646.6 million in guarantees to McDonnell Douglas Corp. to help it finance aircraft production at its Long Beach facilities, Formella said.

However, the majority of the bank's customers in the West Coast Region are smaller companies in the entertainment, computer and environmental industries that would not otherwise be able to afford to set up an export operation, said Slifer.

"We're in the era of Microsoft and Silicon Valley and all that," said Slifer. "We help those companies get financing assistance. The more financing, the more companies can grow."