In an effort to build resilience in the U.S. supply chain, the board of directors of the Export-Import Bank of the United States (EXIM) has unanimously approved a new national financing program, “Make More in America Initiative,” April 14, 2022. will support the creation and expansion of manufacturing facilities and infrastructure projects in the United States that will facilitate U.S. exports. This is a significant expansion of EXIM’s financing capabilities – an extension requested by corporate America for many years and, more recently, by the White House. As the United States faces pressing supply chain issues in critical industries, the program provides a new financing option for U.S. manufacturers in critical areas such as renewable energy, energy storage, semiconductors and wireless communication equipment, as well as ports and other national infrastructure projects that help facilitate exports.

Announcing the new program, EXIM President Reta Jo Lewis said:

“The Make More in America initiative will create new funding opportunities that will boost manufacturing in the United States, support American jobs, and strengthen America’s ability to compete with countries like China. The global pandemic and Other recent events have exposed supply chain gaps in critical sectors like advanced manufacturing and renewable energy. EXIM’s Make More in America initiative will be a key tool in addressing these issues, and it will ultimately help America to manufacture more and export more.

Interested companies can immediately start applying for funding under the new program. EXIM will use the existing application forms with the additional information required. Longer processing times and growing pains are expected as the program becomes operational.

Background

In accordance with Executive Order 14017: US Supply Chainsin June 2021, the White House released Building Resilient Supply Chains, Revitalizing American Manufacturing, and Fostering Broad-Based Growth, a 100-day inter-agency supply chain review report. The report recommended that EXIM “develop a proposal for consideration by the Board of Directors regarding whether and how to implement a new national funding program to support the establishment and/or expansion of manufacturing and infrastructure projects in the United States that would support U.S. exports. The proposal would support and facilitate U.S. exports while rebuilding U.S. manufacturing capacity.” On December 23, 2021, EXIM released a notice seeking public comment on a draft domestic financing proposal.

National Funding Program Key Terms

Standard EXIM terms, conditions and requirements, such as reasonable assurance of repayment, additionality (that EXIM funding does not compete with private sector funding), due diligence and underwriting, will apply. national projects funded under the new programme. Key terms of the new program that would differ from the current terms of EXIM’s mid-term and long-term overseas funding programs are detailed below.

  • General eligibility: The national funding program will be open to all sectors, with priority given to environmentally beneficial projects, small businesses and export zone transformational transactionsincluding renewable energy, energy storage, semiconductors, biotechnology and biomedical products.
  • Export Nexus: All transactions under the domestic financing program must meet an export linkage threshold – a percentage of a project’s output (such as goods produced at a factory) or capacity (such as traffic at a port ) which should be intended for export.
    • For small businesses (including minority and women-owned businesses), transformational export areas and climate-related transactions, the required link is 15%.
    • For projects in other sectors, the required link is 25%.
    • The link to exports can be satisfied by going up the supply chain to count indirect exports. For example, if a firm sells 50% of its output to a domestic firm, which in turn uses 50% of the supplier’s inputs for exports, that transaction will meet the 25% threshold.
  • Supported jobs: Instead of the traditional US content requirement, EXIM will use the number of jobs supported by a project to determine the amount of eligible financing, with the amount based on the number of US jobs supported during construction and for the duration of the project. funding from EXIM. Each employment year (for example, one job in five years equals five employment years) provides up to $189,242 in funding.
  • Shipping under the American flag: EXIM will require the use of US flag shipping for any imports handled by EXIM for a project.
  • Limit on EXIM media: EXIM will support up to 80% of a project’s financing needs.
  • Pricing: As this program would not constitute official export financing, the pricing conditions of the Organization for Economic Co-operation and Development (OECD) arrangement would not apply. EXIM proposed two pricing approaches that would respect its statutory pricing obligations and those of the World Trade Organization (WTO):
    • Direct market proxy: There are several options, including lending on identical terms (or providing cover so that the buyer faces an identical overall price on the covered and uncovered tranches) under a syndicate, the price using issuer-specific credit default swaps (CDS) or price using comparable information on government bonds.
    • Implicit market benchmark: In cases where there is no direct reference market (for example, there is no debt of a comparable duration), EXIM may additionally use the “Through the Cycle Market Benchmark” pricing methodology of the OECD. This methodology uses trade price information to generate market-reflective prices for a wide range of terms and credit ratings.
  • Transparency measures:
    • All domestic financing transactions, regardless of size, as well as any changes to the program itself, will require the approval of EXIM’s Board of Directors.
    • EXIM will notify Congress in advance of any domestic financial transaction over $50 million.
    • EXIM will provide annual reports on overall export and employment performance.
    • Funding agreements will contain contractual remedies if projects do not meet export and/or employment standards.

For more information or questions specific to your organization, contact the authors of this alert.


The information in this alert is intended for the general education and knowledge of our readers. It is not intended to be and should not be relied upon as the sole source of information when analyzing and resolving a legal issue, and it should not substitute for legal advice, which is based on a specific factual analysis. In addition, the laws of each jurisdiction are different and constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular factual situation, you are encouraged to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.


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