U.S. Exim Bank Project Finance Introduction

Dear Client,

Below are the highlights of the requirement of the project finance loan given by the Export-import Bank of the United States (“the U.S. Exim Bank”). We encourage every applicant to ask as many questions as possible, as that would make the process easier.

General Qualification for Project Financing – to qualify for project finance from the U.S. Exim Bank, the applicant must show that they cannot obtain commercial bank loans or that commercial bank loans are unaffordable because of either interest rate or other reasons.

For a project to qualify for Exim support, it must satisfy the following criteria:

1. Green Field. The project must be a “green field” project. This requirement means the borrower cannot use the loan to expand an existing business.
2. The project’s Supplier/EPC (Engineering, Procurement, and Construction) must be American Companies. The product must be made in America or have more than 51% U.S. content contribution to the fabrication.
3. There must be at least one credit-worthy Off-taker. Off-taker means that there must be businesses or entities contractually obligated to accept the goods/ services produced from the project.
4. All materials and equipment used for the project must be American. *
5. The project sponsor/applicant must contribute 15% or more equity to the project. This requirement means that for every $100 the U.S. Exim Bank finances, the bank expects the project sponsor/applicant to contribute 15%, which is $15 in this scenario.
6. Feasibility study, Business Plan and Market Study.
   1. Feasibility study aims to prove that the project is viable and can generate the projected capital to pay back the Project Loan.
   2. The business plan is to tell the U.S. Exim bank what the plans are and how the project sponsor intends to realize these plans.
   3. Finally, the market study is research to prove the current “market” or demand for the services and products for which the project sponsor is seeking a loan.
7. For most countries in Sub-Saharan Africa, Note 4 of the Country Limitation Schedule  of the U.S. Exim Bank requires a local Commercial Bank  to be the obligor or guarantor of the loan. This requirement is very important for many reasons. The U.S. Exim Bank is a foreign bank unfamiliar with the local securitization rules and enforcement methods in Sub-Saharan Africa. When the U.S. Exim Bank finances a project, it also obtains a first lien on the property financed (plus any other property the project may own) to the exclusion of all others. It is, therefore, administratively challenging for the U.S. Exim Bank to do so in many countries, especially in Sub-Saharan Africa. Thus, the U.S. Exim Bank prefers to use local commercial banks for that purpose since the local banks are familiar with the local laws and have facilities for “perfecting” the title of the goods purchased with the project loan on behalf of the U.S. Exim Bank.

Application for Letter of Interest
Every project loan begins with a Letter of Interest (LI). The U.S. Exim Bank uses the letter of interest to express interest in supporting a project with a project finance loan. A LI is not a commitment from the U.S. Exim Bank because conditions precedent are attached to the LI. The applicant must continue to satisfy all the loan requirements until the U.S. Exim Bank makes a final commitment. Accordingly, if an applicant is not truthful and subsequent underwriting investigation exposes the fraud, then Exim Bank would decline to proceed further.

For parties interested in applying for Project Finance in the sub-Saharan African region or other regions in Africa, don’t hesitate to contact our Cassona (USA) office via email info@cassonainternational.com