US bonding line 
 

 US bonding line 

For Australian exporters, competing for business in the United States market can present particular challenges. In the US, suppliers are typically required to provide a surety bond, from a registered US security bond issuer, for up to 100% of the export contract value as security for their performance obligations, compared with 10-15% elsewhere.

You may be unable to raise the security for such a large bond, or be unwilling to tie up so much working capital. If you don’t have a business track record in the US, this can also make it difficult to obtain a surety bond.

EFIC’s US bonding line with Liberty Mutual Insurance Company (Liberty Mutual) enables you to deal directly with EFIC, and we in turn work with Liberty Mutual to help you meet your US bonding requirements.

Our security requirements are based on an individual assessment of your ability to perform the export contract, and may be less than the amount of the bond. As a result, EFIC’s US bonding line can enable you to compete more effectively in the US market without tying up your working capital.

Liberty Mutual is a leading US surety bond provider approved by the US government. It can provide surety bonds for all US states, Puerto Rico and Guam.

What are the benefits?

  • Provides access to bonds in the US, enabling you to take advantage of opportunities offered by the Australia-United States Free Trade Agreement, particularly those in the US government procurement market
  • Reduces the burden of compliance with complex US bonding rules and regulations
  • Usually requires security of substantially less than the value of the bond
  • Frees up your working capital
  • Available for all US states, so you can do business throughout the US.

How does the US bonding line work?

Work flow diagram for US bonding line

  1. You enter into an export contract with your buyer in the US, who requires a surety bond
  2. You apply to EFIC for surety bond support
  3. If EFIC approves your application, you provide security to EFIC
  4. EFIC provides an indemnity to Liberty Mutual for the value of the surety bond
  5. Liberty Mutual issues the surety bond to your US buyer.

Terms and conditions

Terms and conditions will be negotiated during the application process. The following guidelines provide an indication of typical requirements:

Eligibility

You should be an Australian exporter producing goods or services for export which have substantial Australian content.

You should demonstrate that you have the managerial, technical and financial capability to satisfy the contractual obligations covered by the bond.

Term

The surety bond remains in force for the term required by the export contract.

Fees & charges

Fees and charges vary depending upon a number of factors including EFIC’s risk assessment, term and security.

Security

The security required will be determined by EFIC based upon our credit and performance risk assessment.

EFIC will require recourse to your company and may require recourse to company directors and related companies.

NOTE: The information provided, including on terms and conditions, is supplied as a general guideline only. EFIC’s compliance with legislation and OECD guidelines, together with its credit assessment and other policies, influence the actual terms and conditions that may be applicable to any eventual transaction with EFIC.

The information provided does not comprise advice or a recommendation and EFIC makes no representation or warranty relating to it. To the maximum extent permitted by law, EFIC will not be liable for any direct or indirect loss or damage incurred by any person on the basis of this information.