Ex-Im Bank Announces $450 Million for Supply Chain Finance Program With JPMorgan Chase to Support U.S. Small Business and Other Suppliers to Caterpillar Inc.
WASHINGTON, D.C. - The Export-Import Bank of the United States (Ex-Im Bank) today announced the second transaction under its new Supply Chain Finance Guarantee - a 90 percent guarantee to support up to $450 million of liquidity from JPMorgan Chase Bank, N.A. (JPMorgan) to small and medium-sized suppliers of Caterpillar Inc., headquartered in Peoria, Ill.
Ex-Im Bank developed the supply chain finance guarantee in response to the needs of small businesses and President Obama's National Export Initiative. The Ex-Im Bank supply chain financing guarantee, offered to lenders, benefits U.S. exporters and their small- and medium-sized business suppliers through accounts receivable financing. It is designed to inject liquidity in the marketplace and provide suppliers with access to capital.
The supply chain finance guarantee is intended to enable JPMorgan to increase its purchases of accounts receivable owned by U.S. suppliers and due from Caterpillar and which are related to purchases of goods and services by Caterpillar for its export-related production. This program is designed to help qualified Caterpillar suppliers obtain cash more quickly and increase liquidity to fulfill new orders. Exporters have the option to extend payment terms and obtain a working capital benefit without imposing undue financial hardship on their suppliers.
Our supply chain finance guarantee is an innovative product that provides liquidity and strengthens the U.S. export supply chain to help create and maintain jobs, especially for small-business suppliers. We're pleased that JPMorgan was the first lender to sign the master guarantee agreement for this program, which in this case will support qualified U.S. suppliers of Caterpillar, Ex-Im Bank Chairman and President Fred P. Hochberg said.
We are proud to have the opportunity to build upon our existing supply chain finance program with Caterpillar by working with Ex-Im Bank to provide additional financial capacity to Caterpillar's qualified U.S. suppliers. Caterpillar's suppliers are currently seeing cash flow improvements and working capital benefits as a result of discounting their accounts receivables in exchange for faster payment, said Dani Cotti, Global Trade Executive, J.P. Morgan Treasury Services. It was our pleasure to share our extensive supply chain finance experience to help Ex-Im develop the Supply Chain Finance Guarantee Program.
To participate in the Ex-Im Bank program, approved lenders must have an existing supply chain finance program. The Bank requires that at least 50 percent of the credit provided under the program be extended to suppliers meeting the small-business definition of the Small Business Administration by the end of the 12-month term. The accounts receivable to be guaranteed must meet certain requirements, including U.S. content requirements related to the end-use products to be exported.
About Ex-Im Bank:
Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private sector export financing at no cost to American taxpayers. The Bank provides a variety of financing products, including working capital guarantees, export-credit insurance, and financing to help foreign buyers purchase U.S. capital goods and services.
By charging fees and interest on all loan related transactions, Ex-Im Bank is self-sustaining. It is able to cover all operation costs and potential losses while also producing revenue. The Bank has generated $3.4 billion for U.S. taxpayers over the past 5 years.
In fiscal year 2010, Ex-Im Bank authorized a record high of approximately $24.5 billion in loans, guarantees and insurance (including more than $5 billion in authorizations for small businesses), supporting an estimated 230,000 American jobs. During the first quarter of fiscal year 2011, the Bank approved $8 billion in total financing authorizations, supporting nearly $9.3 billion in export sales. The sales in turn support approximately 66,000 American jobs in communities across the country. For more information about Ex-Im Bank visit www.exim.gov.