Lending Against Credit-Insured Foreign or Domestic Accounts Receivable
Opportunities for U.S. banks to make direct loans to companies in foreign countries are potentially profitable, but banks must deal with the challenges of the additional political risks and foreign commercial risks. Credit insurance through Ex-Im Bank and the private-market credit insurers is available to cover these risks.
Coverage can be arranged to protect a bank's short-term (up to 1 year) loans to foreign companies. The loans may be set up either on a revolving or transactional basis to finance the foreign buyer's imports from a single or multiple U.S. suppliers.
We can arrange for insurance to cover financial institutions' medium-term (up to 5 years) loans to foreign borrowers. The loan proceeds must be used by the borrower to purchase capital equipment. Coverage through Ex-Im Bank insures 100% of the loan amount with no deductible.
We are able to arrange coverage for banks against the failure of overseas banks (issuing banks) to pay or reimburse the insured banks on irrevocable letters of credit. Coverage is available to protect against political and commercial risks as causes of default.
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