Part

401

402

Sec.

401.1

401.2 401.3

Procedures.

Extension of credit.

PART 401-PROCEDURES

Types of credit assistance available.
How to apply.

Principals, agents, certifications and
Covenants.

AUTHORITY: §§ 401.1 to 401.3 issued under sec. 2, 59 Stat. 526, as amended; 12 U. S. C. 635.

SOURCE: §§ 401.1 to 401.3 appear at 22 F. R. 6863, Aug. 24, 1957.

§ 401.1 Types of credit assistance available.

(a) Direct financing. The Bank engages in direct financing of exports when it purchases from an exporter without recourse upon him a portion of the notes or acceptances of a foreign importer received by the exporter in connection with an export sale. In a like manner, direct financing of exports is provided by the Bank when it makes loans to a United States or foreign private entity or foreign government for purchases of United States materials, equipment or services destined for a project abroad. Similarly, the Bank directly finances imports when it purchases the obligation of a United States importer in connection with an import transaction.

(b) Guaranties. In lieu of direct purchase of obligations by the Bank, the financing of either exports or imports is frequently provided through guaranties extended directiy to exporters or

importers, or through purchase of the obligations from them by a commercial bank or other financial institution in the United States under an agency or guaranty agreement with the Export-Import Bank. Such guaranties may cover all of the risks of repayment or, if so requested, may be limited to coverage only of dollar transfer or other specified risks.

(c) Advance commitments. United States exporters who expect to bid on specific foreign business may consult the Export-Import Bank prior to submission of bids in order to obtain an understanding of the conditions under which the Bank might consider the granting of a credit or a guaranty. In instances in which sufficient information is supplied with respect to the prospective buyer and the proposed transaction, the Bank will issue a commitment to enable the exporter to make a bid or negotiate a contract of sale.

the proposed transaction. On the basis of the information contained in such a letter, the Bank should be able to indicate whether it would be advisable for the applicant to take the time and incur the expense involved in preparation of a complete application.

(b) Classes of applicants. Applicants may be divided into three general types as follows: (1) United States exporters or importers, (2) private firms, whether domiciled in the United States or abroad, that desire to purchase United States materials, equipment, or services for utilization in a project abroad, and (3) foreign governments or their agencies that wish to purchase United States materials, equipment, or services for utilization in a project abroad.

§ 401.3

Principals, agents, certifications and covenants.

(a) Principals. Applications for credits must be signed by the principals involved. In the case of a corporation or similar entity, a duly authorized officer of the entity shall sign on its behalf. In the case of a government, a duly accredited representative of the government shall sign on its behalf. In the case of a United States exporter seeking financing of the sale of goods to a foreign buyer on credit terms, the exporter shall constitute the principal.

(b) Agents. The Bank prefers to deal with principals, especially in negotiations leading up to the granting of a loan, but the applicant has the right to engage attorneys, engineers, or other qualified persons to advise and aid in preparing material required by the Bank in connection with a loan application or with the operation of a loan which has been granted.

(1) Every person,

(c) Certification. including any foreign government or an agency thereof, individual, partnership, corporation, or association, in whose favor the Bank authorizes the extension of financial assistance within the purview of the Export-Import Bank Act of 1945, as amended, shall, as a condition precedent to the utilization of such financial assistance, represent and certify to the Bank in such form and at such time or times as may be prescribed by the Bank that:

(i) Such person has not paid or agreed to pay to any person including any individual, partnership, corporation, or association, except its regular full-time

individual employees or staff members to the extent of their regular remuneration, any commission, fee, or compensation in connection with obtaining such financial assistance, except such amounts as are included in the certificate, such certificate to set forth the name and address of each such person or persons, together with the description of the services rendered, accompanied by the verification of the recipient or beneficiary of an agreement to pay named in the certificate required hereunder.

(ii) No employee, agent, attorney, or consultant, of such person who performed services in connection with obtaining such financial assistance was a Director, officer, or employee of the Bank during the period of one year immediately preceding the authorization of the extension of such financial assistance.

(2) Upon a determination by the Board of Directors that any commission, fee, or other compensation paid or agreed to be paid in connection with the obtaining of such financial assistance and disclosed in the certification required under this subsection is unreasonable, the person in whose favor the extension of financial assistance has been authorized shall as a condition precedent to the utilization of such assistance, effect an adjustment satisfactory to the Bank in such commission, fee, or other compensation.

(3) Every person, including any foreign government or agency thereof, individual, partnership, corporation, or association, in whose favor the Bank authorizes the extension of financial assistance within the purview of the Export-Import Bank Act of 1945, as amended, shall, as a condition precedent to each advance:

(i) If such person is the supplier of the equipment, materials, or services with respect to which the advance has been requested, certify that, other than as disclosed to the Bank, no payments, allowances, or charges in connection with the sale of, or obtaining the contract to sell, such equipment, materials, or services have been paid or granted or agreed to be paid or granted by such person to any other person, except such person's regular full-time individual employees or staff members to the extent of their regular remuneration.

(ii) If such person is not the supplier of the equipment, materials, or services with respect to which the advance has been requested,

(a) Certify that such person has paid or agreed to pay for the equipment, materials, or services with respect to which the advance has been requested, no more and no less than the amounts which such person has certified to the Bank as the purchase price and all payments, allowances, and charges connected therewith.

(b) Furnish the Bank with a certificate of the supplier of the equipment, materials, or services, with respect to which the advance has been requested, addressed to the Bank and setting forth that such supplier has not, other than as disclosed to the Bank, paid or granted or agreed to pay or grant to such person or any other person, except such supplier's regular full-time individual employees to the extent of their regular remuneration, any payments, allowances or charges in connection with the sale of, or obtaining the contract to sell, such equipment, materials, or services.

(d) Covenants. (1) Every person, including any foreign government or an agency thereof, individual, partnership, corporation, or association, in whose favor the Bank authorizes the extension of financial assistance within the purview of the Export-Import Bank Act of 1945, as amended, shall, as a condition precedent to the utilization of such financial assistance, covenant and agree with the Bank in such form as may be prescribed by the Bank that:

(i) Such person will not during the period of two years following the authorization of the extension of such financial assistance employ or enter into any understanding to employ any person who is a Director, officer, or employee of the Bank or was a Director, officer, or employee of the Bank during the period of one year prior to the authorization of the extension of such financial assistance, unless such employment is approved in writing by the Bank after full disclosure to the Bank of all facts in connection therewith which the Board of Directors shall deem to be relevant.

(ii) Such person has not paid or agreed to pay and will not pay or agree to pay to any person including any individual partnership, corporation, or association except its regular full-time individual employees or staff members to the extent of their regular remuneration, any fee, commission, or compensation in connection with obtaining such financial assistance, except for reasonable com

pensation satisfactory to the Bank for bona fide professional, technical, or other comparable services incident to presenting the merits of the application and operation of the credit and such person will certify to the Bank any such amounts, such certificates to set forth the name and address of each such person together with a description of the services rendered, accompanied by the verification of the recipient or beneficiary of an agreement to pay named in the certificate required hereunder.

(2) Upon a determination by the Board of Directors that any commission, fee, or other compensation paid or agreed to be paid in connection with the obtaining of such financial assistance and disclosed in the certification or covenants required under this sub-section is unreasonable, the person in whose favor the extension of financial assistance has been authorized shall, as a condition precedent to the utilization of such assistance, effect an adjustment satisfactory to the Bank in such commission, fee, or other compensation.

(e) Remedies and penalties. (1) The certificates, representations, and covenants provided for in this part are deemed to be material to and an inducement for the extension by the Bank of such financial assistance and falsifications in any such representation or certificate or the breach of any such covenant shall entitle the Bank to cancel any commitment for the extension of financial assistance to such person or such additional remedies as may be provided in the credit agreement.

(2) The remedies of the Bank provided for in this section and in the contract shall be in addition to any liability or penalty provided by law including those provided for in 18 U. S. C. 1001.1

(f) List of loans, borrowers, and representatives before the Bank. The Bank will maintain for public inspection dur

1 Section 18 U. S. C. 1001 provides: "Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or redresentations, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined not more than $10,000 or imprisoned not more than five years, or both." (June 25, 1948, ch. 645, sec. 1, 62 Stat. 749.)

ing regular hours of business the following information with respect to its operations:

(1) The name of each person including any government, government agency, individual, partnership, corporation, or association in whose favor the Bank has authorized financial assistance;

(2) The amount of such financial assistance, the undisbursed part of such amount, the principal outstanding;

(3) The purpose of such financial assistance; and

(4) The names of all persons who have been certified to the Bank as authorized to act for or on behalf of the respective recipients of financial assistance from the Bank and of all persons listed in certificates required in connection with paragraphs (c) (1) (i) and (d) (1) (ii) of this section.

The Export-Import Bank is guided in its operations by the following basic principles:

(a) The Bank extends loans, guaranties, or financial assistance in other forms for the primary purpose of promoting the export and import trade of the United States. This foreign trade may be assisted, for example, by financing specific exports of United States products or by financing exports of equipment, materials, and services required for specific developments abroad. Foreign trade may also be promoted through financing to build up the economy, increase employment and raise income levels in foreign countries, which thereby afford better markets for American products or become better suppliers of imports required by the United States. Imports can usually be financed through normal commercial channels; but in exceptional cases where private financing is not available the Bank may assist in their financing.

(b) The Bank generally makes loans only for specific purposes. A corollary of this principle is that disbursements under a commitment by the Bank are made only upon receipt of satisfactory evidence that the purpose of the loan have been or are being carried out.

(c) The Bank makes only loans which offer reasonable assurance of repayment. This assurance usually involves not only the credit-worthiness of the borrower but also the ability of the borrower to obtain the necessary dollar exchange to service the loan.

(d) As a general rule, the Bank extends credit only to finance purchases of materials and equipment produced or manufactured in the United States together with technical services of American firms and individuals, as distinguished from expenditures for goods and services in the borrowing country or for purchases in third countries.

(e) The Bank supplements and encourages the utilization of private capital in export and import trade and in foreign investment generally. Financial assistance is not extended by the Bank for any purpose if capital for the same purpose is believed to be obtainable from private sources on reasonable terms.

(f) In the absence of a clear showing to the contrary, it is assumed that credit for periods of less than one year may be obtained on reasonable terms from private sources. Accordingly, the Bank generally limits its consideration to transactions justifying credit of one year

or more.

(g) The Bank is prepared to consider proposals for the purchase of portions of its portfolio by commercial banks or other private investors.

§ 402.2 Maturities, interest rates, and participation.

(a) Maturities. The maturities of credits granted by the Export-Import Bank are arranged in accordance with the circumstances in each case. Generally speaking they are commensurate with those customarily extended in the United States for similar goods or projects. Principal amounts are ordinarily made payable in equal semiannual or quarterly installments.

(b) Interest rates. In determining rates of interest to be charged on loans, the Bank will take into consideration the maturity of the loan and the extent of credit risk to be assumed by the Bank

as affected by such guaranties as may be offered, as well as prevailing United States commercial and government rates. Interest is computed on the outstanding balance and is usually payable semiannually or quarterly.

(c) Participation. The Bank ordinarily requires that a United States exporter who desires financial assistance from it shall have contracted to receive a cash payment of not less than 20 percent of the invoice value not later than delivery of the goods, and that the exporter shall participate in the financing to the extent of not less than 25 percent of the financed portion. Similarly if the applicant is the foreign buyer he should, wherever possible, arrange participation in the financing by the proposed United States exporter.

§ 402.3 Marine transportation and in

surance.

(a) Marine transportation. Public Resolution No. 17, Seventy-Third Con

gress, requires that exports of agricultural or other products fostered by loans made by any instrumentality of the United States Government shall be carried exclusively in vessels of United States registry unless it is determined by the Maritime Administration that such vessels are not available in sufficient numbers or in sufficient tonnage capacity or on necessary sailing schedule or at reasonable rates. When appropriate the Bank is prepared to finance United States inland freight and ocean freight under the relative credit.

(b) Insurance. When the Bank determines that shipments of exports financed through its credits must be covered by marine insurance, the insurance contracts shall be satisfactory to the Bank and shall provide that payments for loss or damage will be made in United States dollars. When such insurance contracts are placed in the United States market the Bank is prepared to finance the premiums under the relative credit.