Internationally-focused companies have experienced more growth than companies that only do business domestically according to PNC’s recent Financial Leadership Survey. Expanding abroad can seem daunting, but with the right alliances and financing strategies, your company can enhance your competitive position and chances of success.
Securing Capital for Global Growth
Internationally-focused companies have experienced more growth than companies that only do business domestically according to PNC’s recent Financial Leadership Survey.
I’m Alan D. Andrews, Vice President of PNC’s Global Trade and Equipment Finance group.
Almost half of the international companies surveyed reported growth of 20% or more, while those that did not do business internationally lagged behind. Both types of companies reported that they feel challenged by the risks associated with conducting transactions and maintaining relationships abroad.
The good news is that there are a number of often overlooked ways to mitigate international risks while at the same time significantly improving your competitive position. PNC has worked with the Export Import Bank of the United States for more than 40 years to become a leading provider of financing solutions for U.S. companies engaged in international transactions. The Ex/Im Bank was established in 1934 to serve as the official export credit agency of the United States. Its mission is to create and sustain U.S. jobs by financing sales of U.S. exports to international buyers.
PNC is a leading provider of loans backed by the Ex-Im Bank’s working capital guarantee program and a top provider of medium-term financing to foreign buyers of U.S. exports through the Structured Buyer Credit Program. PNC participates in Ex-Im Bank programs to help our clients achieve growth globally by providing potential sources of capital for both the client and their customers overseas.
The Ex-Im Bank’s Working Capital Loan Guarantee Program through PNC provides loans for U.S. companies looking to export by leveraging assets that are often difficult to leverage in traditional bank loans – such as foreign accounts receivable, export related inventory, and even work-in-process. This is accomplished through a guarantee from the Ex-Im Bank that covers up to 90% of the repayment amount, including principal and interest.
Ex-Im Bank has designated PNC as having Super Delegated Authority and Fast Track status through this program, enabling us to deliver transactions quickly and efficiently. We can close loans up to $10 million without prior approval from the Ex- Im Bank. And we can close loans between $10 million and $25 million using the Fast Track Option.
The Working Capital Loan Guarantee Program made all the difference for a major U.S. designer and manufacturer of industrial water conditioning and waste-water treatment systems. The company needed immediate assistance in financing inventory and a performance bond to win a bid on a $70 million contract with a large Italian power company.
PNC arranged an Ex-Im Bank guaranteed working capital line in less than 90 days, enabling the client to fulfill the contract on time. PNC was able to close a second working capital line for the same company for a project in the Middle East. In five years, this type of financing has helped the company double in size. (Pause, change in thought) The Medium-term Financing program through PNC and Ex-Im provides international buyers financing for machinery and equipment and other large ticket items.
At a time when U.S. interest rates are at historically low levels, this program provides a way for U.S. exporters to cement relationships with international buyers—particularly those in emerging markets – by offering financing at a significantly reduced rate over what the buyer could obtain locally as well as meeting offers of financing by the U.S. exporter’s competition. It can also become a powerful sales tool and differentiator for U.S. companies looking to sell into foreign markets. The financing program offers the foreign buyer up to five-year terms with a LIBOR or fixed rate option, no local bank support required, and up to 30% local cost financing. It allows the exporter to focus on closing the sale with the assurance of cash upon shipment. The buyer pays all charges.
A large flour mill in the Middle East wanted to expand into a state-of-the-art commercial bakery operation. By providing a competitive rate, 7 year, $7 million loan, PNC enabled several U.S. manufacturers to provide the equipment and expand into this new market well ahead of European competitors.
Expanding abroad can seem daunting, but with the right alliances and financing strategies, your company can enhance your competitive position and chances of success. For more information, please contact me using the information on the next screen. Thank you for your time and attention.
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