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EXIM Finance Lease Guarantee

Competitive Financing for International Buyers

EXIM supports competitive medium-term financing structured as finance leases in addition to financing structured as installment loans. Support of lease financing is important since some foreign buyers of U.S. capital goods prefer lease financing as an alternative to traditional installment loans. EXIM will guarantee lease financing of U.S. goods and services to creditworthy international lessees, both private and public sector, when financing is otherwise not available or applicable interest rates are not economically viable.

Standardized Documentation

In order to provide accessible guarantee support for lease financing, EXIM has created standardized guarantee documentation designed to meet the special requirements of this type of export finance. The MT Master Guarantee Agreement - Finance Lease provides equivalent EXIM support for medium-term finance leases as is provided for traditional loan financing using EXIM Bank's MT Master Guarantee Agreement. Both Master Guarantee Agreements are compatible with the operational efficiencies of EXIM Bank's Medium-Term Electronic Compliance Program.

Benefits:

  • Enables international lessees to obtain finance leases from lessors
  • Flexible financing options and repayment terms
  • Transaction size up to $10 million (financed portion, excluding exposure fee)
  • Coverage is the lesser of 85% of the contract value or the actual U.S. content amount

Eligible Leases

Only finance leases (as defined under International Accounting Standards) are eligible for EXIM guarantee support. Under IAS 17, a lease is classified as a finance lease if it transfers substantially all the risks and benefits of ownership to the lessee. Full payout leases (i.e., those with no residual value) and transactions that are essentially "conditional sales" contracts often qualify as finance leases.

EXIM does not prescribe a particular form of lease agreement for use with the MT MGA - Finance Lease, but has instituted procedures for granting approval of the lessor's lease agreement forms, provided that the lease agreement contains certain provisions required by EXIM (1). To obtain EXIM approval of a lease agreement, the applicant (generally the lessor) must submit a copy of the lease agreement form together with a legal opinion covering specified matters under the law of the relevant jurisdiction (2). If EXIM approves a lease agreement form for use with the MGA - Finance Lease in a specific country, that lease agreement form may be used for subsequent lease guarantee transactions in that country for up to three years without further EXIM review.

Eligible Transactions

In general, EXIM guarantees leases of U.S. capital equipment and related services. Financing may also be available for refurbished equipment, software, certain banking and legal fees (see Financing Fees for Ancillary Services) and certain local costs and expenses (see EXIM Policies - Local Cost).

Military or defense items are generally not eligible nor are transactions involving military lessees, with certain exceptions (see EXIM Policies - Military).

Goods eligible for EXIM financing must meet EXIM Bank's foreign content requirements (see EXIM Bank Policies - Foreign Content).

EXIM can do business in most markets. However, we may be limited or unable to offer financing in certain countries and under certain terms (see Country Limitation Schedule).

Prior to approving certain transactions, EXIM will take into account the economic impact of a particular transaction (see EXIM policies - Economic Impact) and the environmental effects (see EXIM policies - Environment).

Financing Terms

EXIM requires the lessee to make a cash payment (which may be financed by the lessor) equal to at least 15% of the net contract price (3).

Generally, the repayment term of a transaction is determined by numerous variables including but not limited to the borrower's financial condition, the common repayment terms the market gives such products, specific industry practices, industry and country conditions, useful life, OECD and Berne Union agreements, and the matching of terms offered by other foreign government-sponsored financing. Repayment terms up to five years are generally available for exports of capital equipment and services.

Periodic rent payments under the lease may be calculated either on the basis of equal principal amortization or using a mortgage-style amortization (equal payments). Rent may be payable monthly, quarterly or semiannually.

Medium-Term Credit Standards

To qualify for EXIM Bank's medium-term financing, borrowers must meet certain credit standards, depending on the size of the transaction, the nature of the buyer, and the goods and services being financed. If a buyer does not meet these standards, the use of guarantors and other credit enhancements may be used to qualify (see Medium-Term Credit Standards.)

Application

The lessor must have in place a Medium-Term Master Guarantee Agreement - Finance Lease in order to apply for a finance lease guarantee (see Application and Forms).

Since the lessor takes title to the goods and services being leased, the lessor is generally the entity that submits the application for a guarantee of a specific lease transaction.

If the contract has not been awarded, then a lessor, an exporter or an international lessee may request a nonbinding letter of interest (LI) containing EXIM terms for the specific transaction. The LI is processed within seven working days, is valid for six months, and can be renewed.

For more information on the application process, see How To Apply.

Fees

  • Letter of Interest Application Processing Fee is $100 ($50 for online applications).
  • Commitment Fee - 0.125% per annum on the undisbursed balance of the guaranteed portion of the finance lease.
  • EXIM Exposure Fee - Varies, depending upon tenor, country risk, and buyer credit risk (see Exposure Fee Calculator).




(1) The required provisions are set forth in Schedule B-6 to the MT MGA - Finance Lease.
(2) The form of the legal opinion is prescribed in Annex E to the MT MGA - Finance Lease.
(3) Net Contract Price is equal to the aggregate price of all goods and services in the supply contract less the price of any goods and services that are not eligible or are excluded from EXIM support and less any Local Costs included in the U.S. supply contract.