FACT
SHEET:
Supplier
Credit Guarantee Program
March 2006
Printable version
The U.S. Department of Agriculture's export
credit guarantee programs help ensure that
credit is available to finance commercial
exports of U.S. agricultural products, while
providing competitive credit terms to buyers.
The Supplier Credit Guarantee Program (SCGP)
helps exporters offer direct, short-term credit
to foreign buyers of U.S. food and agricultural
products.
Under this program, USDA's Commodity Credit
Corporation (CCC) reduces the financial risk to
exporters by guaranteeing a large portion of the
payments due from importers under financing
arrangements of up to 180 days. The direct
credit extended by the exporter to the importer
for the purchase of U.S. agricultural products
must be secured by a promissory note signed by
the importer.
USDA’s Foreign Agricultural Service (FAS)
administers this program on behalf of the CCC,
which issues the credit guarantee. The exporter
or the exporter’s bank provides the financing.
A substantially smaller portion of the value
of exports (currently 65 percent) is guaranteed
under the SCGP than under the Export Credit
Guarantee Program (GSM-102), where the CCC is
guaranteeing foreign bank obligations. FAS
program announcements provide information on
specific country and commodity allocations,
length of credit periods, the required form of
promissory note, and other program information
and requirements. SCGP regulations are found in
the Code of Federal Regulations 7 CFR 1493.
Eligible Countries or Regions
Interested parties, including U.S. exporters and
foreign buyers, may request that the CCC
establish a program for a country or region.
Prior to approval, the CCC evaluates the ability
of each country to service CCC-guaranteed debt.
Eligible Commodities
The SCGP
targets specific U.S. agricultural products,
with an emphasis on high-value products and
market potential.
Participation
The exporter
negotiates the terms of the export credit sale
with the importer. Once a firm sale exists, the
qualified U.S. exporter must apply for a payment
guarantee before the date of export. The
exporter pays a fee calculated on the guaranteed
portion of the value of the export sale.
Fee rates are based on the country risk that
the CCC is undertaking, as well as the repayment
term (tenor) under the guarantee. The new
structure is in response to rulings by the World
Trade Organization that export credit programs
must be risk based and that fees charged for
participation must be sufficient to cover
long-term program operating costs and losses.
The CCC must qualify exporters for
participation before accepting guarantee
applications. An exporter must have a business
office in the United States and must not be
debarred or suspended from participating in any
U.S. government program. Exporters who have
previously qualified under the Export Credit
Guarantee Program (GSM-102) or the Intermediate
Export Credit Guarantee Program are
automatically eligible.
Financing
The importer must issue
a dollar-denominated promissory note in favor of
the U.S. exporter. The note must be in the form
specified in the applicable country or regional
program announcement. The U.S. exporter may
negotiate an arrangement to be paid, in full or
in part, by assigning to the U.S. financial
institution the right to proceeds 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 the CCC.
Defaults/Claims
If an importer
fails to make any payment as agreed under the
payment guarantee, the exporter or assignee must
submit a notice of default to the CCC. A claim
for loss also may be filed, and the CCC will
promptly pay claims found to be in good order
unless the CCC determines that the guaranteed
portion of the port value exceeds the prevailing
U.S. market value of the commodity or product
exported.
For CCC audit purposes, the U.S. exporter
must obtain documentation showing that the
commodity arrived in the eligible country and
must maintain all transaction documents for five
years from the date of completion of all
payments.
Additional Information
For more
information, contact: Program Administration
Division, Export Credits, FAS/USDA, Stop 1034,
1400 Independence Ave. SW, Washington, DC
20250-1034; tel.: (202) 720-3241; fax: (202)
690-1595. For program participation, contact:
Operations Division,
Export Credits; tel.: (202) 720-6211; fax:
(202) 720-2949.
Export credit guarantee program information,
such as risk-based fee schedules and country
ratings, and commodities eligible for coverage,
is available on the FAS Web site:
http://www.fas.usda.gov/excredits/default.htm
SCGP information also can be found at:
http://www.fas.usda.gov/excredits/scgp.html
FAS program announcements of SCGP allocations
by country or region are posted at:
http://www.fas.usda.gov/excredits/exp-cred-guar.asp
General information about FAS programs,
resources, and services can be found at:
http://www.fas.usda.gov