EXIM Bank's repayment terms applicable to the Insurance and medium- and long-term Loan and Guarantee Programs are explained below.
What is the Repayment Term?
The "repayment term" is the period from the starting point of credit to the final maturity of a transaction. The starting point of credit is generally the completion of the exporter's responsibility under the export contract (e.g., shipment or project completion). Acceptance, retention, and warranty periods are not counted in determining the starting point. The "final maturity" is the due date of the final installment. Repayment begins approximately six months after the starting point, and payments of principal and accrued interest generally must be made semiannually.
For example, assume that a transaction has a 5-year repayment term, semiannual installments, and one shipment scheduled to occur in December 2001. Repayment would begin in June 2002 and consist of ten equal semiannual installments of principal (plus accrued interest). The final payment would be due in December 2006.
What is a Notifiable Repayment Term?
EXIM Bank must notify other official export credit agencies (ECAs) of its intention to offer certain repayment terms. Notifiable terms include (but are not limited to) terms of more than five years in Category I countries. Applicants will be advised when notification is required so that they may make an informed choice between notifiable and non-notifiable terms.
How to Determine the Applicable Repayment Term
Repayment terms hinge generally on three factors: 1) OECD country category;2) EXIM Bank's internal budget cost level evaluation; and 3) contract price. Other special conditions may apply which could shorten or lengthen the maximum repayment term.
Step 1.Identify the country category (I or II) from the list below for the country where the export items will be used.
Step 2.Find the standard term in Chart I that applies to the country category and the contract price of your transaction.
Step 3.Review the terms in Chart II, the Shorter Than Standard Terms, and the Longer Than Standard Terms to determine if they apply to your transaction.
Applicants may request shorter terms than indicated in this section. Since EXIM Bank's exposure fee is related to the repayment term, a shorter term carries a lower exposure fee.
Country Category
The country category is determined by the Organization for Economic Cooperation and Development (OECD) and the categorization is updated annually. Countries classified in Category I are listed below. Category II consists of all countries not classified in Category I.
Australia, Austria, Belgium, Canada, Chile, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, Japan, Korea, Luxembourg, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, United Kingdom, United States.
Chart I.Standard Terms
The following terms applyin the absence ofthe factors described in Chart II and the sections on Shorter Than Standard Terms and Longer Than Standard Terms.
| Contract Price* | Maximum Repayment Term in Years | |
|---|---|---|
| Category I Countries | Category II Countries | |
| Less than $80,000 | 2 | 2 |
| $80,000 to $174,999 | 3 | 3 |
| $175,000 to $349,999 | 4 | 4 |
| $350,000 to $7,000,000* | 5 | 5 |
| $7,000,001 to $11,764,705** | 5 | 7 |
| $11,764,706 to $25,000,000 | 5 | 8 |
| More Than $25,000,000 | 5 | 10 |
*Price of U.S. goods and services, including any eligible foreign content.
**85% of $11,764,705 = $10,000,000, which is the maximum financed portion for medium-term transactions.
Chart II. Terms for Certain Types of Exports
The following terms applyin the absence ofthe factors described in the sections on Shorter Than Standard Terms and Longer Than Standard Terms:
| Export Items | Maximum Repayment Term |
|---|---|
| (All Countries) | |
| 1. Non-capital items, raw materials, lumber, paper, pulp, spare parts | 180 days |
| 2. Bulk agricultural commodities, fertilizers, pesticides, consumer durables (ranges, refrigerators, etc.) | 360 days |
| 3. Breeding cattle Contract price not exceeding $150,000 Contract price exceeding $150,000 | 2 years 3 years |
| 4. Ships* | 10 years |
| 5. Power plants*** Non-nuclear Nuclear (excluding fuel) Initial fuel load Subsequent fuel reloads | 12 years** 15 years** 4 years 2 years |
| 6. Aircraft Large civil aircraft(more than 70 seats in a passenger configuration) Category A aircraft (Turbine powered, generally with 30 to 70 seats) Category B aircraft (Other turbine powered aircraft) Category C aircraft (Non-turbine powered aircraft) | 12 years 10 years 7 years 5 years |
*Refers to ships subject to the OECD Arrangement terms. In certain circ*mstances, EXIM Bank may offer up to 12 year repayment terms, pursuant to the OECD Understanding on Export Credits for Ships. Contact EXIM Bank for qualification details.
**EXIM Bank must notify other official export credit agencies before offering the indicated repayment terms.
***Power plants are complete power stations or parts of power stations, including components, equipment, materials, and services directly required for the construction and commissioning of power stations.
Shorter than Standard Terms
The following limits take precedence over the terms in Charts I and II and the Longer Than Standard Terms:
If the export items are purchased for resale, the term generally may not exceed 2 years. EXIM Bank will consider a term longer than 2 years in conjunction with a Preliminary Commitment or Final Commitment application, provided that the buyer is (i) purchasing the export items to satisfy a specific contract with the end-user of the items, (ii) providing financing to the end-user with a repayment term at least as long as the term requested from EXIM Bank.
If the export items have an expected or useful life that is shorter than the applicable term in Chart I, then the term may not exceed the expected or useful life.
If the borrower's budget cost level, as determined by EXIM Bank, is 8 or higher or EXIM Bank is not open for a total term of more than seven years in the borrower's/guarantor's country (refer to Country Limitation Schedule), the repayment term generally may not exceed five years. EXIM Bank will consider a repayment term longer than five years in conjunction with a Preliminary Commitment or Final Commitment application, provided thetotal termfrom the authorization
date to the final repayment date does not exceed seven years.
If the transaction is under a Credit Guarantee Facility, the term may not exceed 5 years without EXIM Bank's prior approval.
If the average price of the export items comprising a majority of the contract price is less than $1,000,000andthe transaction does not qualify for the Environmental Exports Program (EEP), the term may not exceed 5 years.
Longer Than Standard Terms
The following limits take precedence over the terms in Chart I, provided that the Shorter Than Standard Terms do not apply:
If EXIM Bank confirms that ECA competition exists for transactions eligible for terms of at least two years, EXIM Bank will match the competing term up to:
- eight and one half years for exports to Category I countries.
- ten years for exports to Category II countries.
- If the transaction qualifies for the EEP, the contract price exceeds $349,999,andthe budget cost level, as determined by EXIM Bank, is under 8, the maximum term is:
- eight and one half years for exports to Category I countries.
- ten years for exports to Category II countries.
- fifteen years for certain renewable energy and water projects, irrespective of country category
- If the contract price exceeds $11,764,705andthe export items are to be used in a project, EXIM Bank willconsiderthe following maximum terms on acase-by-casebasis:
- eight and one half years for exports to Category Inon-OECDcountries.
- ten years for exports to Category II countries.
The rationale for a Longer Than Standard Term for a project must be based on at least one of the following factors:
- The degree to which EXIM Bank will rely on the project's anticipated cash flows for
assurance of repayment. - The need for alignment of EXIM Bank's term with the term granted by other lenders to the
project. - If confronting a directly competing tied aid offer, please consult EXIM Bank's Tied Aid
Capital Projects Fund Fact Sheet. Longer Than Standard Terms may be available. (Foreign
tied aid offers are easily recognized: they usually involve terms longer than 20 years, interest
rates one-half or two-thirds of market rates, or large grants.)
