# Presentation: 743052

## The Disbursement Process

**For Guarantee and Loan Programs**

## Overview

- Credit Administration, a unit of the Operations & Data Quality Division, is responsible for:
- Approving and auditing medium-term guarantee disbursements.
- Approving disbursements under Credit Guarantee Facilities.
- Approving L/Cs and reimbursements for loans and long-term guarantees.
- Acting as “Gatekeeper” on foreign content policy and U.S. Maritime Administration shipping requirements.

## Disbursement Basics 

- Transaction must be operative before a disbursement can occur for all loans and guarantees.
- Important operative documents for loans and L/T guarantees:
- Acquisition list approved by Ex-Im Bank’s engineer.
- Evidence of borrower authority to operate the guarantee or loan.
- Medium- and long-term guarantees and loans operate on principle of disbursements against documents.

## Disbursement Basics

- Standard required exporter documents are:
- U.S. commercial invoice for sale of goods or services, _or_
- Progress payment invoice for goods prior to export
- Progress payments must be specifically authorized by Ex-Im Bank.

## Disbursement Basics

- Proof of payment to U.S. exporter:
- Paid stamp on invoice signed by exporter
- Copy of commercial bank’s advice of payment to exporter
- Copy of both sides of a cancelled check made payable to the exporter
- Letter from the exporter confirming payment of invoices

## Disbursement Basics

- Evidence of export:
- Signed, clean onboard ocean, truck, air or railway bills of lading.
- Freight forwarder’s receipts are _not_ acceptable.
- Ex-Im Bank Exporter’s Certificate:
- Issued by a U.S. company with a U.S. street address.
- Completely filled out.
- Original signed by an authorized officer or employee of the U.S. company.

## Disbursement Basics

- An Anti-lobbying Certificate:
- Completed by U.S. exporters and local cost and ancillary service providers
- Required under direct  loans and project finance credits with a direct loan take-out only
- Other documents that Ex-Im Bank might reasonably request**.**

##  Ex-Im Bank Foreign Content Policy 

- Ex-Im Bank cover is for the lesser of 85% of  the net contract price or 100% of the U.S. Content for M/T MGA guarantees, M/T insurance, L/T guarantees and direct loans:
- Aggregate content per US exporter’s supply contract(s).
- Foreign items or components must be shipped from the U.S. to be considered as eligible foreign content.

## Foreign Content Reporting

- Content Report:  description and value of US goods/services and foreign content
- submitted with M/T application or with initial Exporter’s Certificate under L/T
- Annual Foreign Content Cause Report:  reason(s) for sourcing outside of the US
- Not a required disbursement document
- Report forms are on Ex-Im Bank’s website
- Call Ex-Im Bank’s Policy and Planning Division, 202.565.3760 with any questions

## Exporter’s Certificate - Part A: Content

- U.S. exporter discloses foreign content included in the supply contract(s) in the Exporter’s Certificate.
- If U.S. content is 100%, exporter only needs to check a box!
- If U.S. content is less than 100%, exporter must complete the table to determine the U.S. Content and Disbursement Percentage.
- The Disbursement Percentage is applied to all invoices relating to that exporter’s supply contract(s).

## Exporter’s Certificate - Part A: Content

- Amended Exporter’s Certificate is required if material changes –
- Foreign content increases by more than 5% and exceeds 20% of  the Net Contract Price.
- Part A is recalculated using the Disbursement Calculator at _[http://](http://www.exim.gov/tools/disbcalc.cfm)__[www.exim.gov/tools/disbcalc.cfm](http://www.exim.gov/tools/disbcalc.cfm)_
- New Disbursement Percentage applies to all of exporter’s invoices going forward.

## Exporter’s Certificate – Part B

- Disclosures related to the certifications in Part B of the Exporter’s Certificate require prior Ex-Im Bank approval.
- Changes to Part B of the Exporter’s Certificate require an amended Exporter’s Certificate and additional disclosures require prior Ex-Im Bank approval.

## Medium-Term Guarantees

- Guarantee transactions that are:
- Less than or equal to $10 million (excluding Exposure Fee)
- Less than or equal to 7 years repayment.
- Medium-term guarantees are operated under the Medium-Term Master Guarantee Agreement (MGA-M).
- MGA-M  -  (Annex C) - Conditions Precedent sets out conditions that must be met with each disbursement by the guaranteed lender.

## Medium-Term Guarantees

- 3 Methods of Disbursements:
- _Reimbursement_ – to the borrower for the financed portion of payments to an exporter.
- _L/C Payment_ – drawings by the exporter under a letter of credit for the financed portion of goods and services.
- _Direct Disbursement_ – direct payments by the lender to an exporter for the financed portion of goods and services.
- Disbursements may not occur before Ex-Im Bank declares the transaction operative!

## Medium-Term Guarantees

- Electronic Compliance Program (ECP) provides for electronic disbursement approval.
- Required documents are invoice, Exporter’s Certificate, promissory note, evidence of payment and shipping documents.
- Lender submits disbursement information electronically via secure website.
- Exposure Fee must be wired to Ex-Im Bank at the time of disbursement unless paid upfront.

## Medium-Term Guarantees

- Credit Administration reviews ECP checklist and approves disbursement electronically.
**No guarantee certificates or legends**
- PEFCO’s programs have been modified for the ECP.
- Lenders required to hold documents for 10 years following repayment of the financing.
- Credit Administration conducts random audits of disbursement documents.

## Ex-Im Bank Loans & L/T Guarantees

- L/T guarantees are greater than $10 million or greater than 7 years repayment.
- Most L/T guarantees are operated under an Ex-Im Bank Long -Term Master Guarantee Agreement (MGA-L).
- Some L/T transactions between $10-$20 million now operate under the M/T MGA and use the ECP disbursement procedures
- For loans and L/T guarantees, Ex-Im Bank Credit Agreement contains Annex B, Utilization Procedures

## Ex-Im Bank Loans & L/T Guarantees (Cont)

- U.S. Maritime Administration Shipping Requirement
- Public Resolution 17 (PR 17) – Requirement to ship on ocean vessels of U.S. registry
- Applies to all Ex-Im Bank loans
- Applies to L/T guarantees over $20 million authorized after 10/26/04 and some L/T guarantees under $20 million depending on term and program

## Ex-Im Bank Loans & L/T Guarantees (Cont)

- Waivers may be obtained from the U.S. Maritime Administration (MARAD).
- MARAD Contact: Mr. Mike O’Rear, 202.366.5510, or
- _[www.marad.dot.gov](http://www.marad.dot.gov/)_
- Shipping costs from ocean shipments on non-U.S. carriers are considered eligible foreign content if MARAD has issued a waiver (as applicable) and the shipping is covered by a U.S. exporter’s contract.

## Ex-Im Bank Loans & L/T Guarantees (Cont)

- Two Methods of Disbursement:
- Letter of Credit  -  U.S. exporter is beneficiary.
- Reimbursement  -  U.S. exporter has been paid by the foreign purchaser/borrower who is seeking funding against the payment(s).

## Ex-Im Bank Loans & L/T Guarantees (Cont)

- Letters of Credit
- Requires Borrower’s “Request for Letter of Credit Approval” together with a pro forma L/C and Exporter’s Certificate.
- L/C must be issued, confirmed, or advised by a commercial bank in the U.S.
- L/C must cover Acquisition List goods and services.
- L/C must use L/C proviso language incorporating Ex-Im Bank requirements including payment of the exposure fee.
- L/C proviso language available on the Ex-Im Bank web site.

##  Ex-Im Bank Loans & L/T Guarantees (Cont)

- Letter of Credit Disbursements for L/T Guarantees:
- Ex-Im Bank issues “Certificate Approving Letter of Credit” which is equivalent to Ex-Im Bank’s guarantee.
- L/C bank is required to submit drawing documents to Ex-Im Bank with an advice of payment within three days of drawing.

## Ex-Im Bank Loans & L/T Guarantees (Cont)  

- Each drawing under the L/C is a disbursement of the Ex-Im Bank guaranteed loan.
- The L/C drawing also includes payment of the Exposure Fee to Ex-Im Bank if the Exposure Fee is financed.
- Minor L/C amendments may not require Credit Administration’s prior approval.

## Ex-Im Bank Loans & L/T Guarantees (Cont)

- Letter of Credit Disbursements for Loans:
- L/C bank acts as Ex-Im Bank’s paying agent per the Master Reimbursement Agreement.
- Ex-Im Bank issues its “Reimbursement Undertaking” to the L/C bank.
- L/C bank is reimbursed with interest at FRB-NY discount rate + 3⁄4%.
- The Ex-Im Bank Exposure Fee, if financed, is charged against the loan on Ex-Im Bank’s books.

## Ex-Im Bank Loans & L/T Guarantees (Cont)

- Reimbursement Disbursements:
- Export has taken place and U.S. exporter has been paid.
- Borrower submits “Request for Reimbursement” to Ex-Im Bank or guaranteed lender with required export documents.
- For an Ex-Im Bank loan, if documents are satisfactory, Ex-Im Bank disburses funds to the borrower at an account with a U.S. bank and  charges the loan for Exposure Fee, if financed.

## Ex-Im Bank Loans & L/T Guarantees (Cont)

- For a guaranteed loan, lenders must conduct a thorough review of the documents.
- If documents are satisfactory, lender submits borrower’s original “Request for Reimbursement” and required disbursement documents to Ex-Im Bank for review and approval.
- Ex-Im Bank issues “Certificate Authorizing Reimbursement” which is equivalent to Ex-Im Bank’s guarantee.
- Guaranteed lender disburses to borrower at a U.S. bank account and pays Exposure Fee (if financed) to Ex-Im Bank.

##    Ex-Im Bank Loans & L/T Guarantees (Cont)

- Other Points Regarding Disbursements
- Reimbursement and Letter of Credit methods are not mutually exclusive.
- “Certificate(s) Approving Letter of Credit” and “Certificate(s) Authorizing Reimbursement” can be exchanged for Ex-Im Bank’s guarantee legend on a note.
- Ex-Im Bank’s Exposure Fee is usually financed and paid/charged with each disbursement.
- Other Exposure Fee options may be selected at time of application.**  **

## Credit Administration Contacts

- Vice President 		Michele Kuester	202.565.3221
- Admin Assistant		Louanta Gage	202.565.3470
- Credit Administration Officers		Kit Arendt	202.565.3480
- 		Linda Bitterfeld	202.565.3476
-                                                 Donna Schneider           202.565.3612
- Credit Administrator	s               Ruth Anthony	202.565.3478
*    *		Dolleen Jenkins	202.565.3481
-    *	**	*Judy McClain	202.565.3482
- 	***E-mail addresses at Ex-Im Bank:*****  firstname.lastname@exim.gov**

##   Information on the Web  

- Ex-Im Bank Web Site _[www.exim.gov](http://www.exim.gov/)_
- Click on Apply, then Credit Administration & Operations for more information including:
- the Disbursement Calculator
- the L/C proviso language
- the Ex-Im Bank Exporter’s Certificate
- the Electronic Compliance Procedure