- While Supporting U.S. Businesses and Jobs, Following Eleven-Month Review of Economic Impact and Additionality Procedures
- Also Focuses on New “Channel Operations” Strategy with Lenders and Brokers to Help U.S. Small Businesses Succeed in the Global Marketplace, Extension of COVID-19 Relief Measures Until August 31
May 22, 2020/EXIM
The Board of Directors of the Export-Import Bank of the United States (EXIM) took unanimous action to reform two important EXIM procedures – economic impact and additionality – at an open public Board meeting yesterday following an eleven-month review process.
The Board of Directors voted to amend the agency’s economic impact procedures to better assess the potential impacts of its pending transactions on relevant domestic industries. The Board also approved guidelines to strengthen the agency’s determination of “additionality” – the reason why a transaction could not go forward without EXIM financing and therefore requires EXIM support – and a resolution which underscores “the importance of ensuring that EXIM provides competitive financing to U.S. exporters while supplementing, not competing with, private capital.”
In addition, the Board meeting included an update from the Office of Small Business on the agency’s new proactive “channel operations” strategy to more effectively leverage EXIM’s network of broker and lender partners to support U.S. small business exporters seeking to succeed in the global marketplace. EXIM also announced that the agency’s COVID-19 relief measures for small businesses will be extended until August 31, 2020.
“President Trump, the U.S. Congress, and the American taxpayer have my commitment to lead EXIM to new heights, and this effort requires important reforms,” said EXIM President and Chairman Kimberly A. Reed. “The unanimous Board approval of reformed additionality and economic impact procedures demonstrate EXIM’s commitment to transparency and accountability as we work towards our vision of ‘Keeping America Strong: Empowering U.S. Businesses and Workers to Compete Globally.’”
Following the full re-opening of EXIM in May 2019 with the Senate confirmation of the EXIM Board of Directors, Chairman Reed launched a broad reform initiative at the agency. As part of this initiative, EXIM undertook an eleven-month review of its economic impact and additionality policies and procedures. The process leading up to yesterday’s Board action included an extended public comment period, two EXIM Advisory Committee public meetings featuring experts with diverse views (October 30, 2019: press release, transcript; January 21, 2020: press release, transcript), bipartisan outreach with Congress, and input from other U.S. government agencies, including the White House Office of Management and Budget and U.S. Departments of Commerce, State, and Treasury.
Economic Impact Procedures
To reform the agency’s economic impact procedures, EXIM is enhancing transparency by creating an opt-in email list to enable interested parties to be notified proactively whenever EXIM undertakes a detailed economic impact analysis and proactively publishing after Board action non-confidential summaries of the findings of any detailed economic impact analyses.
For commercial aircraft transactions, EXIM is modifying and simplifying the procedures to focus solely on route-specific competition, which could result in more aircraft transactions undergoing enhanced scrutiny of potential economic impacts.
To assist in determining additionality, EXIM now will require an overall more robust process and more written documentation of the case for additionality from the inception of each transaction until it is presented for Board consideration. To guide loan officers in that task, the Board approved a new additionality checklist that must be included with all Board memos. Moreover, EXIM has informed commercial banks that, on every application for EXIM financing, they will be asked why they are unable to provide financing without EXIM support. Each year EXIM will develop a matrix of transaction parameters (e.g., market risk, loan term, and loan size) based on feedback from leading global export finance institutions that will inform EXIM staff whether a given transaction falls into a zone where the private sector is likely to participate, in which case heightened scrutiny will be given to that transaction’s additionality claim.
EXIM will take further actions to bolster its additionality procedures, which include editing its application to remind applicants that the certification includes the reason for EXIM support, adding a question to EXIM’s annual private lender survey about whether EXIM has ever displaced the respective lender on a transaction, and implementing new procedures to strengthen additionality processes related to short-term insurance transactions.
Beginning in fiscal year 2021, EXIM will publish an annual report about the additionality of its financing in the previous fiscal year, including a review of the additionality reasons for transactions and a review of the private-sector capacity for uncovered financing.
Noting EXIM’s historic 2019 reauthorization, which increases the EXIM small business threshold to thirty percent of the agency’s portfolio, Chairman Reed is prioritizing small business initiatives to increase small and medium-size engagement with EXIM to support the growth of U.S. jobs. Since the Board was confirmed one year ago, EXIM has authorized approximately 1,870 U.S. small business transactions totaling just over $2 billion in authorizations and supporting thousands of jobs across the nation.
Small Business “Channel Operations” Strategy
EXIM’s Board heard from the agency’s Office of Small Business on a new business development strategy focused on making brokers and lenders more successful in originating, onboarding, and servicing EXIM export credit insurance policies. Adopting a “channel operations” strategy will enable EXIM to scale the number of small businesses that the agency reaches with limited personnel and resources by better leveraging the agency’s network of lenders and brokers. The strategy is being developed through focused interviews with lenders and brokers, and external private-sector specialists. EXIM anticipates a rollout of the new strategy in the summer of 2020.
COVID-19 Relief Extended Through August 31
EXIM has extended until August 31, 2020, all the agency’s relief measures for exporters and partners affected by the COVID-19 pandemic. EXIM has provided relief measures applicable to its major small business products—export credit insurance and working capital guarantees. More information on EXIM’s COVID-19 relief efforts is available online.