WCGP Lender Application Requirements - Delegated Authority
How a lender applies to EXIM Bank for Delegated Authority: eligibility, the three-part application package, the seven evaluation points, and the extra conditions that apply to Level 1.
- •Issued by: Export-Import Bank of the United States · Working Capital Guarantee Program
- •Based on "WCGP Application Requirements v.2"
- •Applicant: the Lender (bank or other commercial credit provider), not the exporter
- •Companion to the Master Guarantee Agreement summary (Part 1)
Approving loans without case-by-case EXIM approval
Under the Working Capital Guarantee Program, a lender that EXIM Bank has found eligible can apply for Delegated Authority. The lender and EXIM Bank then sign a Delegated Authority Letter Agreement. This lets the lender approve loans and receive an EXIM Bank guarantee without submitting an individual application to EXIM Bank for each facility.
Why it matters for an exporter: a borrower dealing with a Delegated Authority lender can get its guaranteed working capital facility approved faster, because the bank does not wait for EXIM's decision on each deal.
Who can apply
- •Any bank, provider of commercial credit, or other public or private lender may apply to participate in the program.
- •EXIM Bank looks at the lender's financial condition, its knowledge of trade finance and its ability to manage asset-based loans.
- •Lenders new to EXIM Bank must submit three years of audited statements or their three-year annual report.
- •Lenders meeting the eligibility requirements in the Working Capital Guarantee Program Manual can be approved as Delegated Authority Lenders, which brings expedited processing.
- •Affiliates: in certain circumstances the guarantee may extend to Loan Facilities set up by a lender's affiliate.
What to send to EXIM Bank
| # | Item | Detail |
|---|---|---|
| 1 | Cover letter | Requests Delegated Authority. Addressed to Steven Freshour, Vice President, Business Credit Division, 811 Vermont Avenue, NW, Washington, DC 20571. |
| 2 | Financial statements | Three years of audited statements, or three years of annual reports (with notes). |
| 3 | Answers to the evaluation points | May be included in the cover letter or enclosed separately in the package (see Section 4). |
What EXIM wants to know about the lender
| Point | Topic | What to provide |
|---|---|---|
| i | Organisational and ownership structure | EXIM must "know the customer". Show the lender and its holding-company structure. If privately or substantially owned by a few individuals, give detailed owner information. Bios of key individuals in the management chain are usual. |
| ii | Markets and communities served | A geographical area or state. |
| iii | Commercial lending operations | Size of the lending portfolio and customer base (for example commercial real estate, commercial and industrial). |
| iii (second, as numbered in source) | Credit underwriting and approval system | How credit is approved, credit limits, and which management levels set lending policy: local, regional or national. |
| iv | Asset size of the lender | A Level 1 lender may not have total assets above $500 million. If assets exceed $500 million, skip this point. |
| v | Asset-based loan monitoring | Experience monitoring asset-based loans at the basic levels the program needs: department and personnel, ABL portfolio size, breakdown of monitoring groups, and bios of those who will run the Delegated Authority Program. |
| vii (as numbered in source) | Key personnel for the program | At least one Vice President (or equivalent) or higher must attend EXIM's two-day overview seminar and the third-day Delegated Authority Lender training, or an abbreviated EXIM session (half-day on EXIM programs, half-day on insurance programs, half-day on WCGP Delegated Authority training). A webinar is accepted as an alternative. Name the attendees and how they will oversee Delegated Authority loans. |
Loan Servicing Expectation (EXIM's excerpt)
The lender should monitor the Loan Facility under its standard institutional procedures for other non-EXIM asset-based loans. That includes receiving and applying all principal and interest payments, reviewing financial statements, Export-Related Borrowing Base Certificates and other reporting, taking collateral protection and recovery measures, and performing all other loan making, servicing and collecting duties. The lender may use its own borrowing base certificate if it includes every component the Export-Related Borrowing Base Certificate requires.
Entry level of Delegated Authority
| Condition | Requirement |
|---|---|
| Prior experience | No prerequisite that the lender has made any WCGP Loan Facilities operative before receiving Level 1. |
| Credit memoranda | The lender must submit its internal credit memorandum for each of the first three Loan Facilities it makes operative under Delegated Authority. |
| Term limit | Loan Facilities approved under Level 1 are limited to a maximum of 12 months. |
| Receivables protection | All Accounts Receivable of a Level 1 Loan Facility must be supported by irrevocable Letters of Credit, insured by acceptable credit insurance, or covered by a combination of both, totalling 100% of the Accounts Receivable. |
| Reduced fee benefit | Meeting the 100% receivables protection requirement qualifies the Borrower for the Reduced Facility Fee (see Part 1: 1.25% instead of 1.75%). |
| Move to Level 2 | After at least three Loan Facilities made operative under Delegated Authority, at least one year as a Level 1 lender, and a satisfactory field examination by EXIM Bank staff, the lender may request Level 2. |
| Officer training | The two-trained-officer rule is waived at Level 1. |
Where to look next
- •Section III of the Working Capital Guarantee Manual (form EBD-W-15) sets out the levels of Delegated Authority and program guidelines in full. EXIM lists it on its website at img.exim.gov under s3fs-public/forms/ebd-w-15.pdf.
- •The signed Delegated Authority Letter Agreement works alongside the Master Guarantee Agreement summarised in Part 1.
- •Part 2 of the Master Guarantee Agreement summary (events of default, claims, miscellaneous) is still to come.
Source
Export-Import Bank of the United States, "Working Capital Guarantee Program - Application Requirements v.2" (3 pages), as supplied. This page is an independent summary prepared by BookMyCA / AVPM & Associates and is not issued by EXIM Bank.