Global Trade Solutions

International Payment & Finance Methods

October 28, 2011

Norfolk, Virginia

Copyright 2005 SunTrust Banks, Inc.

 Agenda

Products and Services for Exporters

Risk Comparison International Methods of

Payment

Documentary Collections

Letter of Credit

Trade Financing
SBA
EXIM Bank
Export Credit Insured Accounts Receivable

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 Products and Services

International Trade Products

Trade Services Trade Finance
Commercial Letters of Working Capital Loans
Credit - Import & Export for exports
Standby Letters of Credit Foreign Receivable
Documentary Collections Financing
Export Credit Insurance Foreign Buyer Financing
International Overseas Investment
Correspondent Banking Financing

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 Risk Comparison
INTERNATIONAL
METHODS OF PAYMENT
INTERNATIONAL
METHODS OF PAYMENT
Trade Terms
Exporter Risk Importer Risk
Open Account
High Low
Documentary Collection(Time)
Documentary Collection (Sight)
Letters of Credit (Time)
Letters of Credit (Sight)
Cash in Advance

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 International Methods of Payment

Getting Paid and Managing Risk

Copyright 2005 SunTrust Banks, Inc.

 International Methods of Payment

Documentary Collections
Draft or Documents Against Payment Or Acceptance

Time of Payment: SIGHT at time of presentation of

the draft
Time of Payment: TIME at a future date.
Goods available to Buyer: after payment if ALL Ocean
Bills of Lading are included with the documents and
after the cargo has arrived.
Risk to Seller: possible non-payment of the draft.
Risk to Buyer: has assurance of shipment, but Seller
may not ship goods as ordered. Must pay to get title to
goods.
Not recommended for sales on extended terms

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 International Methods of Payment

Documentary Collections

Benefits

More secure than Open Account

Goods available to Buyer: after payment if ALL Ocean
Bills of Lading are included with the documents and
after the cargo has arrived.
Risk to Seller: possible non-payment of the draft.
Risk to Buyer: has assurance of shipment, but Seller
may not ship goods as ordered. Must pay to get title to
goods.
Dont encumber Buyers line of credit
Inexpensive

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 International Methods of Payment

What is a Letter of Credit?

A payment instrument issued by a bank on behalf of its customer.
The issuing bank substitutes its own credit standing for that of its
customer.
The issuing bank undertakes to pay for the goods or services provided by
the beneficiary of the LC; the beneficiary looks to the bank for payment,
instead of the buyer (applicant of the LC).
The LC assures the beneficiary (exporter) of payment when the terms of
the credit are met.
The exporter is not obligated to perform if the terms of the LC are not
acceptable.
Commercial letter of credit can be paid at sight or at period in future
Time Letter of Credit can be discounted if seller doesnt want to wait until
LC maturity. Simple form of trade finance.

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 Letters of Credit
Benefits

More secure than Open Account

Foreign Bank promises to pay exporter if documents
are in compliance with letter of credit
Goods available to Buyer: after payment if all Ocean
Bills of Lading are included with the documents and
after the cargo has arrived.
Risk to Seller: LC void if seller docs are not in
compliance, i.e. have discrepancies
Risk to Buyer: has assurance of shipment, but Seller
may not ship goods as ordered. Must pay to get title to
goods.
Versatile can build in terms for buyer and still have
assurance of payment from overseas bank

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 International Trade Finance

TRADE FINANCE TOOLS

These traditional payment methods are fine, but what if your customer
wants extended terms of payment or your competitors are offering
better terms? You need financing to put the order together?

Trade Finance may be the solution to your customers needs and the
way to make exports a manageable part of your growth strategy.

SBA Export Express

SBA Export Working Capital Program

EXIM Bank Working Capital Program

Insured Foreign Receivables Financing

Both SBA and EXIM assists US exporters to obtain loans to produce

goods or services for export. They guarantee repayment to the lender,
making it possible for banks to extend financing to the exporter. They
do not compete with commercial lenders, but assumes the risks they
cannot accept.

SunTrust Bank is a delegated lender for both SBA and EXIM Bank
Programs

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 International Trade Finance

SBAs Export Express Working Capital

Guarantee Program

The program supports single transactions or multiple sales

under a revolving line

Maximum loan amount limited to $500,000

Guarantees 90 percent of a commercial bank loan up to

$350,000 and 75 percent from $350,000-$500,000

Program minimizes government mandated forms. Streamlines

processing and costs of smaller SBA loans for exporters

VERSATILE -- Can be used for working capital, issue standby

letters of credit for advance payment guarantees, participation
in foreign trade shows, or translation of product literature for
use in foreign markets

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 International Trade Finance

SBAs Export Working Capital Guarantee

Program

The program supports single transactions or multiple sales

under a revolving line

Guarantees 90 percent of a commercial bank loan up to

$5,000,000

Can be used to purchase goods and services or pay for labor

& materials to put together an export order Pre Export
Financing

Can be used to support standby letters of credit for

performance bonds or advance payment guarantee

At the minimum, loan must be collateralized by export- related

AR and inventory

No US content requirement or military sales restrictions

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 International Trade Finance

FEES and RATES

Guarantee Fee:

Maturities of 12 months or less = 1/4 percent

Maturities greater than 12 months = 2-3.75% depending on loan size

Interest Rates/Lender Fees are Negotiable

ELIGIBILITY

A business must meet SBAs industry size standards and have been
in business for at least 12 continuous months

SunTrust Bank is a delegated lender for SBAs Export Working Capital

Guarantee Program

One of few banks in country to be awarded this designation

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 International Trade Finance

Export Import Bank of the US Export Working

Capital Guarantee Program

The program covers 90% of the loans principal and accrued interest

STB minimum loan request is negotiable there is no maximum amount

At the minimum, loan must be collateralized by export-related AR and inventory

Goods must have at least 50% US cost content to guarantee the entire
transaction

Loans Can Be either Transaction Specific or Revolving

High Advance Rates on Inventory and Receivables, including work in Process

.
Some restrictions to the program (military exports and some countries are
excluded)

Financing Provided for Short, Medium, and Long Term

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 International Trade Finance

Export Credit Insurance & Insured Foreign Receivables

Financing

Insurance Available through EXIM Bank and Private Sector Insurers

Commercial risk insurance (buyer bankruptcy and insolvency)

Political risk (war, inconvertibility of currency)

Short Term & Medium Term Insurance Policies, Multi Buyer or Single Buyer
Policies

Enables US exporters to extend open account terms to international buyers

(protect US exporters against foreign buyer default)

Insured export receivables looked upon favorably by banks. Exporters may be

able to borrow against insured foreign A/R.

Good option for service companies who have little inventory for collateral

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 Contact:
Marsha Sompayrac
Director, Global Trade Solutions
919 E. Main Street, 2nd Floor
SunTrust Bank
Richmond, VA 30303
Tel: 804-782-5558
Marsha.Sompayrac @ Suntrust.com

Hai-nah Ellison
Vice President, Global Trade Solutions
919 E. Main Street, 2nd Floor
SunTrust Bank
Richmond, VA
Tel: 804-782-7476
Hai-nah.Ellison@ Suntrust.com

Copyright 2005 SunTrust Banks, Inc.