Export Guarantee Program

The U.S. Department of Agriculture's (USDA) Export Credit guarantee Program (GSM-102) provides credit guarantees to encourage financing of commercial exports of U.S. agricultural products, while providing competitive credit terms to buyers. By reduc

The GSM-102 program provides credit guarantees to encourage financing of commercial exports of U.S. agricultural products.

Export Credit guarantee Program (GSM-102) provides credit guarantees to encourage financing of commercial exports of U.S. agricultural products, while providing competitive credit terms to buyers. By reducing financial risk to lenders, credit guarantees encourage exports to buyers in countries, mainly developing countries, that have sufficient financial strength to have foreign exchange available for scheduled payments. This Program provides guarantees to lenders.

Exporters or the exporters assignee are the direct beneficiaries and must meet the applicant eligibility requirements. Interested parties, including U.S. exporters, foreign buyers, banks, may request that the CCC establish a GSM-102 program for a country or region. Prior to announcing the availability of guarantees, the CCC evaluates the ability of each country and foreign bank to service CCC guaranteed debt.

CCC guarantees payments due from approved foreign banks to exporters or financial institutions in the U.S. However, the financing must be obtained through normal commercial sources. Typically, 98 percent of principals and a portion of interest are covered by a guarantee. because payment is guaranteed, financial institutions in the U.S. can offer competitive credit terms to the foreign banks, usually with interest rates based on the London Inter Bank Offered Rate (LIBOR). Any follow-up on credit arrangements between the foreign bank and the importer are negotiated separately and are not covered by the CCC guarantee.

Guarantees issued are for the export of eligible U.S. agricultural commodities only.

The payment guarantee applies to a credit period established in the application, and coverage begins either on the date(s) of export or the date when interest begins to accrue, whichever is earlier. Coverage will continue during the credit term specified in the payment guarantee. However, the payment guarantee does not become effective until the date of export.

The CCC-approved foreign bank issues a dollar-denominated, irrevocable letter of credit in favor of the U.S. exporter, ordinarily advised or confirmed by the financial institution in the U.S. agreeing to extend credit to the foreign bank. The U.S. exporter may negotiate an arrangement to be paid as exports occur by assigning to the U.S. financial institution to the right to process that may become payable under the CCC's guarantee. Under this arrangement, the exporter would also provide transaction-related documents required by the financial institution, including a copy of the export report, which must also be submitted to CCC.

Please contact the headquarters or regional office for addition approval information.