Diony Cespedes interviews Ex-Im Banker

A   Q&A  with Bruce Drossman

By  Diony Cespedes

 

1. Would you provide a specific example of a small business that was approved for the Express Insurance and/or the working capital offerings (e.g., type of business, size)?  What did they do right?  In other words, why was their application strong enough to be approved?

Larkin Newco is a small business located in Stamford, CT, and does business under the “Sysdyne” name.  Sysdyne manufactures an “Enterprise Resource Planning System” for concrete batching and dispatching. A unit, which costs upward of $20,000, includes both Windows-based software and control panel hardware. Sysdyne provides what is so far the only cloud-computing central dispatch system to the concrete industry. Most of the business to date had been domestic, with a few export sales completed.

Jill Zhang, President, saw huge potential for sales growth with small Mexican cement producers. While sales growth potential was excellent, the prospect of a significant increase in exposure to small Mexican buyers was daunting.  Jill and her team took out an Express Insurance policy to permit Sysdyne to market the product intensively with extremely competitive open account sales terms, while limiting risk.

They did so successfully by doing several things right:

  • The company had been in business under the current ownership for 10 years, and was already successfully selling a quality product domestically.
  • Sysdyne carefully studied and compared the program alternatives with the Ex-Im Bank Regional Office, and then selected one of Ex-Im Bank’s registered brokers to assist with the application and approval process. Broker commissions are born, by the way, by Ex-Im Bank, not the exporter.
  • Buyer limit requests under the policy were for longer than typical terms, and required additional information for the underwriters, which Sysdyne was able to efficiently source and provide.

2.  Do you provide feedback to businesses that are not approved for either the insurance or working capital offerings?   How often can a business re-apply?

We provide written guidance to applicants in advance of the application process in the form of a document available on our website called the Short Term Credit Standards. Some minimum standards may at times be waived but, if necessary, the underwriter will revert to the applicant or broker with questions.  If responses to questions do not result in a full approval, the application will be denied or requested withdrawn, with explanation.  Reapplication may be made if the cited deficiencies can be demonstrated to have been adequately addressed.

3. What advice would you provide to applicants of the insurance and/or working capital products?

I can’t over-emphasize the importance of good presentation on the part of a prospective exporter-applicant, whether it is with regard to describing a company’s business and export transaction requirements to Ex-Im Bank or to an Ex-Im guaranteed lender.  If you’re taking out insurance, select one of the brokers shown on our website to assist with processes and ensure that the policy requirements are fulfilled in case of a claim.

4. Is there anything else you would like to tell our readers?

Qualified small business exporters shouldn’t leap to the conclusion that the Export-Import Bank is focused solely on large corporate export transactions.  We work hard to achieve our Congressionally mandated target of providing direct risk protection and financing support directly to small business exporters in an amount of at least 20% our annual authorizations (almost $33 billion in fiscal 2011), which results in the number of small business export transactions totaling over 85% of those authorized annually.  And for small working capital financing requirements under $500,000 in size, watch for the roll-out of our new Global Credit Express program, shortly to commence its pilot phase.