Question

***This an International Finance Course***

Analyze government programs to finance exports.

Your response should be at lest 200 words in length.

Answer 1

Government programs to finance exports:

• Export development & working capital financing:

This enables the business people to obtain loans that helps in export of goods & services by providing the liquidity needed to accept new businesses & helping to grow effectively in international market place.

1. Small business administration – export working capital program: provides short term transaction of up to $5 million to provide working capital loans to small exporters. Facilities under this scheme include pre export financing of labor & materials, post shipment financing etc.
2. EXIM bank – working capital guarantee program: the benefits of this program includes purchasing finished products for export, payment for raw materials, equipment, supplies, labor, overhead to produce goods, providing services for export etc.
3. Small business administration – export express program: this covers the initial costs of entering export market up to $500,000 which includes financing to buy or produce goods, provide services for export etc.

• Facilities development financing:

This helps the US business people to acquire, construct, renovate, improve or expand facilities & equipment to be used in production of goods& services in international trade.

• Financing for international buyers: this helps the US business people to locate finance to purchase goods & services when financing is not available in economically viable rates.

1. EXIM Bank – loan guarantee program: this provides term financing for creditworthy public & private buyers for purchase of goods & services.
2. EXIM Bank – direct loan program: provides fixed rate loans for creditworthy public & private buyers for purchase of goods & services.
3. EXIM Bank – finance lease guarantee program: provides lease financing to credit worthy buyers as alternative to traditional investment loans.
4. USDA, Foreign agricultural service export credit guarantee: this underwrites the credit extended by private banks to foreign banks using letters of credit to pay for food & agricultural products sold to foreign buyers. These encourage exports to buyers in countries where credit is necessary to increase US sales.

• Investment project financing:

This is useful for business people to acquire large scale projects that requires huge amount of capital in infrastructure, telecommunications, power, housing, financial services etc.

1. Overseas private investment corporation small & medium enterprise financing – provides medium & long term funding through direct loans to eligible investment projects in emerging & developing countries