EFIC’s Export Finance Guarantee (EFG) facility supports the export of Australian capital goods and/or services by guaranteeing and indemnifying medium to long term financing provided by a bank. Typically, the bank advances the funds directly to the Australian exporter on behalf of the buyer and these funds are repaid over an agreed timeframe at an agreed interest rate. The bank is secure in advancing the funds given the comprehensive guarantee and indemnity provided by EFIC.

An EFG facility may be of assistance if you are an Australian exporter looking at a contract involving:

• the export of capital goods or services that have an eligible level of Australian content;
• commercial or political risks which banks may be unwilling to finance without a guarantee and indemnity;
• a minimum contract value of $5 million; and 
• where financing will provide you with a competitive edge or is a requirement of the contract, or where financing proposals may support competing tenders.

Guarantor and Indemnifier

Export Finance and Insurance Corporation (EFIC).

Lender

The loan must be provided by a bank acceptable to EFIC. The bank is not required to be an Australian financial institution nor must the loan be funded from an Australian branch of a bank.

Loan

The Lender typically advances funds directly to the Exporter in accordance with the milestones in the Contract and with the approval of the Buyer. If the Buyer has already paid the Exporter, the Buyer can be reimbursed under the loan facility.

Exporter

Any Australian company undertaking a Contract for the supply of capital goods or services.

Buyer/Borrower

The party contracting to buy capital goods and/or services. It may be a private or public company, a department of a foreign government or a state-owned company.

Security

EFIC determines its security requirements on the merits of each transaction.

Contract

EFIC supports export contracts involving Australian capital goods and/or services. Services include, but are not limited to, project management, design, commissioning and advisory services provided by Australians.

Contract Value

This is the value of the Contract between the Exporter and the Buyer. EFIC has supported contracts and projects ranging in value from $5 million to $300 million.

Eligible Contract Value

The “Eligible Contract Value” (“ECV”) represents EFIC’s estimate of the qualified Australian and third country sourced content in the Contract, i.e. the aggregated imported content into the buyer’s country. Typically, EFIC looks to see at least a 60% level of ECV to be of Australian content in an eligible Contract although exceptions to this level may be approved depending upon the circumstances.

EFG Maximum Liability

Under guidelines established by the OECD, EFIC may guarantee up to a maximum 85% of the ECV, plus an additional amount of local costs incurred in the destination country in implementing the Contract. The maximum local cost EFIC can support is the lower of 15% of the ECV and the local cost amount.

Cash Payment

Normally the Exporter must receive a minimum direct payment of 15% of the ECV prior to the first advance under a loan. The cash payment is not eligible for EFIC support.

Loan Currency

All major international currencies and certain acceptable local currencies.

Drawdown Period

The availability of advances under the loan facility is matched to the term of the Commercial Contract.

Interest Rate

At the Borrower’s option, EFIC may support a loan with either:

1. a fixed interest rate equal to the prevailing Commercial Interest Reference Rate (CIRR) set by the OECD at the time EFIC issues a formal offer; 
2. a floating interest rate, for example the prevailing six month London Interbank Offered Rate (LIBOR) for US dollars, with a once only option to switch to the CIRR prevailing at the time of the switch. No additional fee is charged for this option.

The actual interest rate for any loan would be subject to the rates prevailing at the time EFIC issues a formal offer and, in the case of the floating interest rate, would be reset semi-annually.

Interest Payments

Interest is payable semi-annually in arrears on loan balances outstanding under the facility supported by the EFG, commencing within six months of the first drawdown of loan funds.

Amortisation of EFG Liability

EFIC’s liability under the EFG normally reduces in equal and consecutive semi-annual instalments of principal due from the Borrower to the Lender typically commencing within six months of the end of the Drawdown Period.

Fees and Charges Payable by the Lender

Guarantee Fee

A Guarantee Fee is payable by the Borrower together with Establishment and Commitment Fees. The Borrower is also required to pay any travel and legal costs that may be incurred by EFIC in relation to establishing an EFG facility as well as any stamp duty, or other charges, duties or taxes payable in relation to the transaction.

Documentation

Documentation required would include:

1. a supply contract between the Exporter and the Buyer;
2. a finance facility agreement between EFIC, the Lender and the Borrower;
3. a guarantee support agreement and guarantee and indemnity agreement are entered into between the Lender and EFIC;
4. an Exporter’s deed between EFIC and the Exporter;
5. any security documents required to support the terms in any formal offer letter issued by EFIC.

Contact Us

To apply or to discuss your financing needs further, please contact our Structured Trade and Project Finance Team:

Telephone: +61 (0) 2 9201 2111
Fax: +61 (0) 2 9201 2295
Email: finance@efic.gov.au

DISCLAIMER: This document is provided to give you an indication of the terms and conditions upon which EFIC may be willing to provide an export finance guarantee. In connection with a particular transaction, EFIC reserves the right to make any changes or additions to the final terms and conditions that it believes are necessary or desirable. All requests for guarantees are considered on a case by case basis.