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HOW YOUR INTERNATIONAL BANK CAN HELP

HOW YOUR INTERNATIONAL BANK CAN HELP. One of the top 20 banks in the United States with over $65 billion in assets Founded in 1856 with headquarters in Buffalo, NY Footprint: NY, PA, MD, VA, DC, DE, WV, NJ Long history of financing US exports Extensive correspondent banking relationships.

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HOW YOUR INTERNATIONAL BANK CAN HELP

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  1. HOW YOUR INTERNATIONAL BANK CAN HELP

  2. One of the top 20 banks in the United States with over $65 billion in assets Founded in 1856 with headquarters in Buffalo, NY Footprint: NY, PA, MD, VA, DC, DE, WV, NJ Long history of financing US exports Extensive correspondent banking relationships M&T Bank Fast Facts

  3. Most Advantageous to the Exporter Most Advantageous to the Importer Methods of Payments Cash in Letter of Documentary Open Advance Credit Collections Account

  4. Wire transfers (SWIFT or telex) Speed Bank to bank security Foreign drafts Available in foreign currencies and U.S.Dollars Mailed directly to payee by customer INTERNATIONAL PAYMENTS

  5. A bank’s undertaking to pay the beneficiary a specified sum of money, provided the stipulated documents are presented in conformity to its terms and conditions. Bank will pay the beneficiary even if the applicant cannot do so, provided conforming documents are presented. COMMERCIAL LETTER OF CREDIT

  6. Confirmed- moves the risk to the US bank; no foreign risk Sight payment- money comes after documents are negotiated Time payment- gives buyer up to 180 days to pay Discount-exporter is paid and bank waits for buyer to pay LETTERS OF CREDIT

  7. Standby letter of credit – a bank’s undertaking to pay if the applicant fails to perform an obligation. It is generally not a primary payment mechanism and is not intended to be drawn upon. Uses: - Bid bonds - Performance bonds - Advance payment - Assuring payment - Loan warranty STANDBY LETTER OF CREDIT

  8. Banks handling documents, per instructions received, in order to: Obtain acceptance and/or payment Deliver commercial documents against acceptance and/or against payment Deliver documents on other terms and conditions DOCUMENTARY COLLECTION

  9. Encourages banks to lend to small business exporters Ex-Im & SBA Goal: increase employment Types of exporters: Manufacturers Trading companies Service providers WORKING CAPITAL GUARANTEES

  10. Collateral shortfall Large contract relative to sales Marginal credit Tight cash flow MUST BE ABLE TO PERFORM TYPICAL EXPORTER SITUATIONS

  11. Loan disbursements can be used for: Purchase of raw materials and finished goods inventory. WIP Purchase of goods/services Foreign accounts receivable Issuance of Standby Letters of Credit WHAT CAN BE FINANCED?

  12. Financing for a specific transaction One year revolving line Collateral: export inventory and foreign AR’s Export credit insurance may be required to support A/R’s Borrowing Base Certificate WHAT IS A TYPICAL LOAN STRUCTURE?

  13. Collateralized at reduced rates: 25% of face value of the SLC Can be used for: Bid requirements Advance payment Performance STANDBY L/C’S UNDER WORKING CAPITAL GUARANTEE PROGRAMS

  14. Benefits: Extension of credit to buyers Reach new markets/buyers Obtain short-term financing Protection on receivables SHORT-TERM CREDIT INSURNCE

  15. Commercial risks Buyer insolvency Management issues Industry downturn Inadequate cash flow Competition Natural disaster Political risks War/revolution Insurrection Cancel/revoke: Importer’s license Foreign currency: Conversion restrictions Transfer restrictions WHAT ARE COMMERCIAL AND POLITICAL RISKS?

  16. Coverage: 100% political risk; 95% commercial risk No first loss deductible Small businesses with less than $5.0 million in export credit sales (on avg.) for past two years Qualify as a small business (SBA definition) EX-IM BANK SMALL BUSINESS POLICY

  17. 100% political/90% commercial or 95% equalized cover First loss deductible Discretionary Credit Limits Ex-Im Bank and private insurers MULTIBUYER POLICY More Experienced Exporters

  18. Single sale or multiple shipments Comprehensive risk coverage No first loss deductible Expensive premiums due to concentrated risk SHORT-TERM SINGLE BUYER

  19. Attractive financing to buyers of U.S. capital goods and services, with the support of Ex-Im Bank & private insurers Capital Goods & Services Buyer Financing

  20. Loans at attractive US interest rates. Financing of up to 85% of the purchase price. Repayment terms from 2 to 7 years. Exporter gets paid shortly after shipment. Program Benefits

  21. Long operating history Significant sales Audited financial statements Existing US business relationships What to Look for in Foreign Companies

  22. Contact Information: Sean Meadows: Trade Finance 410-244-4588 smeadows@mtb.com Jerry Solomon:Working Capital 410-244-4821gsolomon@mtb.com

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