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Consider All Financing Options in the Global Green Economy

By John Eustermann
In the current economic climate, businesses in the environmental and renewable energy sectors must explore all options when it comes to financing their projects or operations. A potential source for those selling their products and services abroad is the Export-Import Bank of the United States (Ex-Im Bank). Now 75 years old, Ex-Im Bank is the principal government agency responsible for aiding the export of U.S. goods and services through a variety of loan, guarantee and insurance programs. Further, in recent years, Ex-Im Bank has been on a mission to promote the export of goods and services related to renewable energy or that are beneficial to the environment. In furtherance of this mission, Ex-Im Bank established an Office of Renewable Energy and Environmental Exports to expedite the lending process. Likewise, similar banks operated by a number of foreign countries (export credit agencies (ECAs)) serve a similar purpose and have designed special programs to enhance their respective exports of renewable energy and environmental goods and services.

These financial institutions, and particularly Ex-Im Bank, offer financial products that occupy the following categories, all at rates competitive with ECAs: guarantees and direct loans, working capital facility guarantees and export credit insurance. Ex-Im Bank does not compete with private-sector lenders but provides export financing products that fill gaps in trade financing. Ex-Im Bank assumes credit and country risks that the private sector institutions are either unable or unwilling to accept. Ex-Im Bank levels the playing field for U.S. exporters by matching the financing that other governments provide to their exporters. In addition, essentially no transaction is too large or too small.

Ex-Im Bank and ECAs can facilitate trade and investment in this tight economic environment and have an important role in filling financing gaps to promote clean energy investment and related trade activity. As of Sept. 30, the amount of money that Ex-Im Bank approved for financing to assist in the export of goods from the U.S. amounted to more than $21 billion. Furthermore, as of September, Ex-Im Bank announced that it will provide up to $250 million to help finance exports of U.S.-built-and-designed technology used in generating renewable energy. For those developing projects that may involve technologies from outside the U.S. or for companies looking to deploy their technology internationally, these figures warrant attention and the above-mentioned programs deserve further investigation. Familiarity with Ex-Im Bank programs could be beneficial to manufacturers and service providers engaged in or contemplating international green trade.

Considering the tight debt markets, Ex-Im Bank's products can assist in de-risking certain business transactions. For example, credit-worthy U.S. companies that need to pay for raw materials, equipment, supplies, labor and overhead to produce goods and/or provide services for export and to purchase finished products for export may find Ex-Im Bank's working capital loan guarantee program to be of great benefit.

The most practical starting point for a business interested in Ex-Im Bank financial programs is its web site at www.exim.gov, where Ex-Im Bank has abundant information about its products, underwriting guidelines and application procedures. Copies of most applications, instructions and transaction documents can also be downloaded from the Web site. Further, Ex-Im Bank has set up a call-in consultation service where product specialists are available to field questions and provide direction by phone at (800) 565-3946. Finally, Ex-Im Bank maintains an Office of Renewable Energy and Environmental Exports tailored to support U.S. businesses in these economic sectors.

In light of the movement toward green energy and environmentally sound products and services as evidenced by, among other things, the incentives and programs set forth in the stimulus package, Ex-Im Bank's working capital guarantees, medium- and long-term direct loan programs to foreign buyers, and its Export Credit Insurance Program are financing alternatives that warrant serious consideration. Finally, the programs offered by the host country of any international transaction counterparty should be considered as well.

John Eustermann is a partner with Stoel Rives LLP. Reach him at jmeustermann@stoel.com or (208) 387-4218.
 

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