Export Financing
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Export financing enables Canadian companies to take advantage of foreign markets by selling
goods and services to foreign buyers.
Various forms of financing are available in the Canadian marketplace from chartered banks,
Business Development Bank of Canada (BDC) and Export Development Corporation. (EDC)
Export financing consists of a range of financial and risk management services, including 1) export
credit insurance 2 ) financing to foreign buyers of Canadian goods and services 3 ) guarantees
and 4) working capital
Export credit insurance protects exporters receivables against losses resulting from commercial
and political risks. Short term insurance covers payment terms of 180 days or less and medium
insurance covers payment terms up to five years. Backed by an export credit insurance policy,
export receivables become more attractive collateral for a lender.
Financing to foreign buyers of Canadian goods and services can be arranged for any export
transaction. Direct buyer loans usually apply to transactions with repayment terms that exceed two
years.
Performance-related guarantees protect the exporter or its lender when the exporter is required to
issue bonds or guarantees for international projects.
EDC is one of the primary providers of financial and risk management services to Canadian
exporters and in cooperation with other financial institutions including BDC are able to facilitate
many export transactions.
Advantages
Exporting is an avenue for expansion into new markets and business growth.
Export financing increases access to new sources of capital.
Export insurance protects Canadian exporters from credit losses before, during and after an export
transaction.
Disadvantages
Exporters have to weigh the cost of the service provided by EDC or other financial institutions
against the potential cost of carrying the risk in their own name.
© Copyright 2001-2012 Project Executive Group, Inc. All rights reserved.
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Project Executive Group
"The test of an organization is the spirit of performance." - Peter Drucker
Allen & Crawford Structured Project Finance Advisors
Trusted Advisors to Boards and Senior Management in Energy & Infrastructure BOO/BOT/BOOT Specialists
www.allen-crawford.com
Division of the Project Executive Group
Highly Confidential Finance & Turnaround Engagements
Paul Allen of Allen & Crawford is a member of the Houston Energy Finance Group
and
Winner of the Global Project Development and Finance Award for the "Most Innovative Infrastructure Financing of 1995"
Awarded by the Editorial Board Project Finance Monthly
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