Export Credit Insurance Overview

Export Credit Insurance Overview

What Is Export Credit Insurance?

The United States accounts for just 5% of the world’s population, which means that U.S. companies can benefit from real growth when exporting. While risk is inherent to growth, U.S. exporters of all sizes can protect themselves when selling to international customers on credit terms with export credit insurance.

Export credit insurance reduces the risk of foreign buyer non-payment when extending open account payment terms to international customers. Besides being a business tool that protects your company’s credit, when export credit sales are insured, U.S. exporters are able to receive cash advances on those sales.

U.S. exporters have the option of insuring export credit sales for a single foreign buyer or multiple foreign buyers in approved markets worldwide; furthermore, exporters only pay a premium on the export credit sales they insure.

Export Credit Insurance and Export Receivable Financing

Founded in 1934, the Export-Import Bank (Ex-Im Bank) is the official export credit agency of the United States. Ex-Im Bank insurance protects U.S. exporters of all sizes, allowing them to expand internationally with ease and confidence. In addition to risk mitigation, insuring foreign or export receivables means U.S. exporters are able to receive cash advances on those sales when they ship.

Export credit insurance can replace or complement other payment methods, such as: cash-in-advance, letters of credit, and other documentary sales. By limiting risk, U.S. exporters are able to sell to more international customers with ease and confidence.

Drake Finance is an approved Ex-Im Bank lender, funding Ex-Im Bank insured and guaranteed transactions for U.S. exporters nationwide. When an exporter insures its export receivables through Ex-Im Bank, Drake Finance is able to advance up to 90% of the invoice directly to the exporter; the remainder, minus any applicable fees, is remitted to the exporter once the international customer pays the invoice in full.

Benefits

  • Export credit insurance provides up to 95% coverage against foreign buyer non-payment due to certain political or commercial risks.
  • It enables exporters to extend competitive credit terms of up to 180 days to international customers; and, in exceptional cases, exporters are able to extend credit terms of up to 360 days to international customers.
  • Insurance premiums on export credit sales are only paid when the policy is used.
  • When export receivables (credit sales) are insured, Drake Finance is able to advance monies directly to the exporter upon shipment. U.S. exporters don’t have to wait to get paid when extending credit to foreign buyers.

Short-Term Export Credit Insurance Policies

Ex-Im Bank’s short-term export credit insurance covers a wide range of goods, including, but not limited to: raw materials, spare parts, components, capital goods, and consumer goods.

Single-Buyer Export Credit Insurance Policy

This policy protects U.S. exporters when extending short-term credit (less than 1 year) to a single credit-worthy foreign buyer during a 12-month policy period.

Policy Features:

  • Insures one or multiple shipments to a single foreign customer.
  • Provides 90% coverage against foreign buyer non-payment.
  • No first-loss deductible.
  • Insured export receivable (credit sale) can be presented to Drake Finance for immediate funding and access to working capital.

Multi-Buyer Export Credit Insurance Policy

This policy protects U.S. exporters when extending short-term credit (less than 1 year) to multiple credit-worthy foreign buyers during a 12-month policy period.

Policy Features:

  • Insures exports credit sales to multiple buyers.
  • Provides 95% coverage against foreign buyer non-payment.
  • Premiums are only paid on the export credit sales you insure.
  • Insured export receivable (credit sale) can be presented to Drake Finance for immediate funding and access to working capital.

Small Business Multi-Buyer Export Credit Insurance Policy

This policy provides small business U.S. exporters with enhanced protection when extending short-term credit (less than 1 year) to multiple credit-worthy foreign buyers during a 12-month policy period.

Policy Features:

  • Insures export credit sales to multiple buyers.
  • Provides 95% coverage against foreign buyer non-payment.
  • Simplified premium-rate schedule and premiums are only paid on the export credit sales you insure.
  • Insured export receivable (credit sale) can be presented to Drake Finance for immediate funding and access to working capital.

 

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