EXIM Bank Loan Guarantee - Master Guarantee Agreement (Part 1)
90%
Of Guaranteed Amount Paid by EXIM
1.75%
Annual Facility Fee (1.25% if reduced criteria met)
10 Bus. Days
Facility Fee Due After Effective Date
60 Days
Fee Cut-off Before Guarantee Becomes Void
Part 1 covers the preamble, Articles I to III and Article IV up to Section 4.09 - the 90% guarantee, who qualifies, the facility fee, borrowing base and advance rates, collateral, guarantors and the lender's monitoring duties.
- •Issued by: Export-Import Bank of the United States · Working Capital Guarantee Program
- •Based on the form dated 3/15/2019 (EXIM Bank form EBD-W-16)
- •Applies to Loan Facilities with an Effective Date on or after 15 March 2019
- •Part 2: Sections 4.10 onward (defaults, claims, miscellaneous)
What the guarantee is for
The Master Guarantee Agreement is the standard contract between a Lender (a bank) and the Export-Import Bank of the United States under the Working Capital Guarantee Program. Lenders set up Loan Facilities that give working capital to entities involved in manufacturing, producing or buying, and then exporting, goods or services of US manufacture or origin.
As a condition of each facility, EXIM Bank guarantees payment of 90% of the Guaranteed Amount. The agreement works together with the Loan Authorization Agreement for each facility and, where they apply, the Delegated Authority Letter Agreement and the Fast Track Lender Agreement.
Three Types of Loan Facility
| Facility | How it works |
|---|---|
| Revolving Loan Facility | Working capital loans or letters of credit, drawn and repaid on a continuous basis against Availability on the Export-Related Borrowing Base during the term. |
| Transaction Specific Loan Facility | Credit tied to Specific Export Orders. Once repaid, amounts may not be re-borrowed. |
| Transaction Specific Revolving Loan Facility | A revolving facility set up to finance Specific Export Orders. |
Benefit in plain terms: the borrower gets a bank facility it might not otherwise qualify for, because the Lender carries only about 10% of the risk on the guaranteed amount.
Who and what qualifies
Eligible Person (Borrower)
A sole proprietorship, partnership, LLP, corporation or LLC that meets all of these:
- •Domiciled, organised or formed in the United States, whether owned by a foreign national or foreign entity.
- •In good standing in its state of formation or otherwise authorised to do business in the US.
- •Not currently suspended or debarred from doing business with the US government or any of its bodies.
- •Exports or plans to export Items.
- •Has operated as a going concern for at least one year.
- •Has positive tangible net worth under US GAAP.
- •Has had revenue-generating operations in its core business for at least one year.
An Affiliated Foreign Person meeting these tests other than the US-domicile test can also be treated as an Eligible Person once approved under Section 4.16.
Key Definitions
| Term | Meaning |
|---|---|
| Items | Finished goods or services meant for export, directly or as an Indirect Export, that meet the U.S. Content requirements and are listed in the Loan Authorization Agreement. |
| U.S. Content | All costs (labour, materials, services, overhead, but not markup or profit) of US origin or manufacture that are incorporated into an Item in the United States. |
| Export Order | A documented purchase order or contract from a Buyer to buy Items for export from the US, showing the Items, Buyer name, destination country, Buyer contact details and total amount. |
| Indirect Exports | Finished goods or services sold to a Buyer located in the US but intended for export, and identified in the Loan Authorization Agreement. |
| Guaranteed Amount | Outstanding principal at the Claim Date, plus letter of credit drawings after that date, plus unpaid interest at the Guaranteed Interest Rate, plus Collateral Protection, Enforcement and Realization Costs up to the Costs Maximum Amount. |
| Guaranteed Interest Rate | The contract rate (fixed or floating) but never any post-default, post-maturity or post-demand increase. |
| Costs Maximum Amount | The lowest of: actual unreimbursed costs; 5% of the outstanding principal on the date of the payment failure; or $50,000, unless EXIM Bank agrees otherwise in writing. |
| Extension | An amendment extending the Final Disbursement Date on the same terms for up to 180 days in total beyond the original date. |
| Retainage | The part of an Export Order price that a Buyer need not pay until after satisfactory performance. |
What EXIM pays, and what the Lender pays EXIM
A. The Guarantee - Article II
- •If a Claim Triggering Event occurs (a Payment Default or a BBC Trigger), EXIM Bank pays the Lender, in US dollars, 90% of the Guaranteed Amount.
- •If a payment of principal or interest is rescinded or must be returned (for example due to the borrower's bankruptcy or insolvency), the guarantee is reinstated for 90% of that payment.
B. Facility Fee - Article III
The fee is paid by the Lender to EXIM Bank. The Annual Facility Fee Percentage is 1.75%, reduced to 1.25% if the criteria in Exhibit 1 (the Criteria for Reduced Facility Fee) are met at least ten days before the fee is due.
| Facility | When due | Fee calculation |
|---|---|---|
| Term of 12 months or less | Within 10 Business Days of Effective Date | Maximum Amount x annual fee % x (greater of 6 and the number of months in the term, rounded up) / 12 |
| Term over 12 months (not transaction specific) | Within 10 Business Days of Effective Date, and on each Loan Facility Anniversary Date | Maximum Amount x annual fee % x months until the next anniversary or Final Disbursement Date (max 12) / 12 |
| Transaction specific, term over 12 months | Within 10 Business Days of Effective Date | Maximum Amount x annual fee % x months in the term / 12 |
| Increase in Maximum Amount | Within 10 Business Days of the amendment | (New Maximum Amount minus old) x annual fee % x relevant time fraction |
| Extension | Within 10 Business Days of the extension date | Maximum Amount x annual fee % x days in extension / 360 |
A completed Facility Fee Schedule must accompany each payment made on an anniversary date, extension or increase in Maximum Amount.
C. Late Payment and Method
- •Late fee: $50 for each calendar day the fee stays unpaid after the 10th Business Day, up to the 60th calendar day.
- •Consequence: if the fee and late fees are not credited by the 60th calendar day, the Guarantee is null and void for Credit Accommodations made after the relevant date.
- •No invoice: EXIM Bank has no obligation to bill the Lender. The Lender must keep a verifiable record of payment.
- •Method: by Fedwire in US dollars to the Federal Reserve Bank of New York for credit to EXIM Bank's Treasury account, or by cashier's check sent by certified mail to EXIM Bank's Office of the Treasurer Controller in Washington, D.C.
How much can be lent
Availability at any time is the lesser of (a) the Maximum Amount minus outstanding Credit Accommodations, and (b) the Export-Related Borrowing Base minus outstanding Credit Accommodations.
Maximum Advance Rates (unless EXIM Bank sets otherwise in writing)
| Collateral category | Maximum Advance Rate |
|---|---|
| Eligible Export-Related Accounts Receivable | 90% |
| Eligible Export-Related Inventory | 75% |
| Eligible Export-Related Overseas Accounts Receivable | 70% |
| Eligible Export-Related Overseas Inventory | 60% |
| Retainage Accounts Receivable (only if approved in writing) | 25% |
The borrowing base is the sum of the advance-rate-adjusted values of each eligible category (overseas assets, retainage and other assets only if EXIM Bank permits in writing), less reserves for outstanding letters of credit and any other reserves the Lender considers proper. Inventory is valued at the lowest of cost, market value or appraised/orderly liquidation value.
Types of Letter of Credit
- •Commercial Letters of Credit - issued for a Borrower's suppliers, in dollars, subject to UCP.
- •Standby Letters of Credit - drawable by a Buyer only if the Borrower fails to perform an Export Order, subject to ISP or UCP.
- •Warranty Letters of Credit - standby credits supporting a Borrower's warranty obligations.
Overadvances: the Lender must demand cure when outstanding credit exceeds the borrowing base. A Permitted Overadvance is limited to 5% of the Maximum Amount, must keep total credit within the Maximum Amount, and cannot last more than 90 consecutive days.
What the Lender must put in place - Sections 4.01 to 4.09
| Requirement | Detail |
|---|---|
| Loan Documents [4.01] | For each facility: a Loan Authorization Agreement with EXIM Bank, a Borrower Agreement (Annex A), a Guarantee Agreement from each Guarantor, and a Loan Agreement with the Borrower, plus any promissory note. Documents must be assignable to EXIM Bank, governed by US state or territory law, and allow only lender-elected dispute resolution. |
| Effective Date [4.01(f)] | Not later than 60 days after EXIM Bank signs the Loan Authorization Agreement, unless EXIM Bank consents. |
| Security interest [4.02] | A valid, enforceable and perfected first priority lien in all Collateral, subject only to Permitted Liens, with UCC filings and continuation statements maintained. A UCC search is required after the Effective Date unless the facility is a Renewal. |
| Primary Collateral [4.02(b)] | At minimum, export-related receivables, inventory (where in the borrowing base), general intangibles, other assets and other collateral. |
| Secondary Collateral [4.02(c)] | All other assets of the Borrower that secure any other accommodation from the Lender. |
| No separate security [4.02(d)] | The Lender may not take a lien on assets outside the Collateral to separately secure the unguaranteed portion. |
| Guarantors [4.03] | A Guarantee Agreement is required from each person who owns or controls 20% or more of the Borrower, otherwise controls its affairs, or guarantees the Borrower's Domestic Asset-Based Loan Facility. No guarantee is needed if the Lender does not require one under a domestic facility at least equal to the Maximum Amount. |
| Standard of care [4.04] | The Lender manages the facility for the joint benefit of both parties, with the care it uses for its own loans and at least that of a reasonable lender. |
| Application of proceeds [4.04(c)] | Before a claim payment: interest at the Guaranteed Interest Rate first, then principal, then other obligations. Where proceeds cannot be attributed, pro rata percentages apply. |
| Country Limitation Schedule [4.05] | The Lender must send each updated schedule to Borrowers within 10 Business Days of receiving it from EXIM Bank. |
| Economic Impact Certification [4.09] | Obtained from each Borrower (Annex E) before Items are included in the Loan Authorization Agreement, and again before adding Items. |
Financial statements: each Borrower and Guarantor must be required by the Loan Documents to deliver the statements described in Section 11 of the Loan Authorization Agreement [4.01(d)].
Certificates, records and field examinations
Borrowing Base Certificates and Records [4.06-4.07]
- •The Lender may lend only after receiving an Export-Related Borrowing Base Certificate, covering at least the most recent month-end, and must hold one at least monthly (or daily electronic reporting reconciled monthly) while credit is outstanding.
- •Each certificate comes with the Export Orders (or a written summary for revolving facilities) where inventory supports the base, and an Accounts Receivable Aging Report where receivables support it.
- •The Lender may rely on certificates unless it has actual knowledge they are wrong or fraudulent.
- •The Lender keeps accurate records of each credit accommodation, payment and accrued interest, and lets EXIM Bank inspect them on notice.
Inventory and Overseas Limits [4.06(d)-(f)]
- •If inventory-supported credit exceeds 75% of total disbursements plus undrawn commercial letters of credit, the Lender must demand more non-inventory collateral, paydown or a reduction within 30 days, or remove inventory from the base.
- •If overseas assets support more than 50% of the borrowing base, the Lender must demand cure within 30 days or remove the excess from the base.
Field Examinations [4.08]
| Maximum Amount | Minimum frequency | Substitution allowed |
|---|---|---|
| $5,000,000 or more | Every 6 months | Audited financial statements for one of the two annual exams (conditions apply). EXIM may require two exams case by case. |
| $2,000,000 to under $5,000,000 | Every 12 months, if a Domestic Asset-Based Loan Facility at least as large exists | Audited statements for one exam where more than one is conducted. |
| $1,000,000 to under $2,000,000 | Every 12 months | Audited statements for the sole annual exam. |
- •The same schedules apply to smaller facilities where the Lender already examines the Borrower under other facilities.
- •Exams must cover collateral value, any amount by which disbursements exceed the borrowing base, and material compliance with Loan Documents, including inventory valuation and a book audit of receivables.
- •An isolated extension of up to 90 calendar days is available if requested in writing beforehand and EXIM does not object within 10 Business Days.
- •Sampling: at least quarterly, the Lender reviews 10% of Export Orders (or invoices) by dollar volume or number. Facilities over 12 months need an annual review submitted to EXIM Bank.
When the guarantee stops covering new credit
Under Section 4.06(c), the Lender must not provide a Credit Accommodation in these situations. If it does, the Guarantee is null and void for those accommodations:
- •After the applicable Final Disbursement Date.
- •After an Event of Default on the facility, unless EXIM Bank approves in writing.
- •If the Lender knows the credit will be used in a way the Borrower Agreement prohibits.
- •If the Lender knows no outstanding Export Orders or Eligible Export-Related Accounts Receivable exist.
- •If no borrowing base certificate has been obtained within the required time to support Availability.
- •If the Lender knows Special Conditions or waivers were not satisfied.
What Triggers a Claim
| Trigger | Meaning |
|---|---|
| Payment Default | Borrower fails to pay principal or interest when due, or fails to cure an Overadvance (extra collateral or repayment), and the failure lasts more than 30 consecutive calendar days. |
| BBC Trigger | A failure to deliver the borrowing base certificate that continues for 90 calendar days and either EXIM approves in writing the Lender's request to file a Claim, or EXIM directs the Lender to file one. |
Events of Default and the full claims procedure begin at Section 4.10 and Article V. They are covered in Part 2.
Key dates and durations in Part 1
| When | What happens |
|---|---|
| 15 March 2019 | Form date. Applies to Loan Facilities with an Effective Date on or after this date. |
| 60 days (max.) | Between EXIM Bank signing the Loan Authorization Agreement and the facility Effective Date, unless EXIM consents otherwise. |
| 10 Business Days | Facility Fee due after the Effective Date, each anniversary, extension or increase in Maximum Amount. Also the time to pass on an updated Country Limitation Schedule. |
| 60 calendar days | Last day to credit the Facility Fee and late fees ($50 per day) before the Guarantee becomes void for later credit. |
| Monthly | Minimum frequency of Export-Related Borrowing Base Certificates while credit is outstanding. |
| 30 days | Cure window for borrower after Lender's demand on inventory ratio, overseas concentration or Overadvance; also the period a payment failure must continue to become a Payment Default. |
| 90 days | Maximum duration of a Permitted Overadvance; BBC Default period before a BBC Trigger; maximum isolated extension for a field exam. |
| 180 days (max.) | Total Extension of the Final Disbursement Date beyond its original date. |
Source
Export-Import Bank of the United States, Working Capital Guarantee Program, Master Guarantee Agreement (form dated 3/15/2019), pages 1 to 29. This page is an independent summary prepared by BookMyCA / AVPM & Associates and is not issued by EXIM Bank.
For advisory purposes only. The agreement form and program terms may have been revised since 2019, and individual facilities vary by Loan Authorization Agreement. Confirm current terms, fees and eligibility with EXIM Bank (exim.gov) or the participating lender before relying on this summary.