Terms and Conditions
EFIC lends money to overseas buyers to fund their purchase of Australian capital goods and/or services through its Direct Loan facility. Typically, EFIC advances the funds directly to the Australian exporter on behalf of the overseas buyer, and these funds are repaid in accordance with an agreed repayment schedule based on an agreed interest rate. EFIC’s Direct Loan facility could assist you if your project or contract involves: - the export of capital goods and/or services that have a sufficient level of Australian content;
- a minimum contract value of $5 million; and
- the provision of a comprehensive finance package to your overseas buyer or where it may give you a competitive edge.
Lender Export Finance and Insurance Corporation (EFIC). Exporter Any Australian company undertaking a Contract for the supply of capital goods and/or services. Buyer The overseas party contracting to buy the capital goods and/or services. It may be a private or public company, a department of a foreign government or a state-owned company. Borrower The Buyer may also be the Borrower. Alternately, the Borrower may be a parent or holding company, a Buyer's bank or the Ministry of Finance acting on behalf of a government. Security EFIC determines its security requirements based on the merits of each transaction. Contract EFIC's Direct Loan facility is available to support contracts valued at $5 million or more involving the export of Australian capital goods and/or services. Capital goods are machinery and equipment of high unit values, but low unit value supplies may also qualify for EFIC's support in the context of a larger project. Services include, but are not limited to, project management, design, commissioning and advisory services provided by Australians. Loan Value EFIC may, subject to Australian Content guidelines, finance: - up to 85% of the combined Australian and foreign-sourced content excluding local costs ('Eligible Contract Value' or 'ECV') in a Contract (limited to 80% in relation to the export of ships);
- plus an additional amount to fund the local cost portion, i.e representing expenditure for goods and services sourced from the overseas buyer's country, capped at 30% of the ECV.
Cash Payment The Exporter must receive a minimum direct payment of 15% of the ECV (20% in relation to ships) normally prior to the first drawing under a loan. The cash payment is not eligible for EFIC finance.
Loan Currency All major international currencies. Availability Period The availability period for drawings under the loan facility generally correlates with the payment term of the Contract. Interest Rate At the Borrower’s option, EFIC may provide either a: - fixed interest rate equal to the Commercial Interest Reference Rate (CIRR) set by the OECD or such other fixed interest rate that EFIC is prepared to offer; or
- floating interest rate, for example, the six month London Interbank Offered Rate (LIBOR) for US dollars, with a once only option to switch to the CIRR or such other fixed interest rate that EFIC is prepared to offer. No additional fee is charged for this option.
Interest Payments Interest is generally payable semi-annually in arrears on loan balances outstanding, commencing within six months of the first drawdown.
Loan Repayment The loan principal is generally repaid based on a set number of equal and consecutive semi-annual instalments commencing within six months of the end of the Availability Period. Principal repayments are normally synchronised with interest payments. Other repayment structures may be considered on a case by case basis.
Fees and Charges Finance Fee This fee compensates EFIC for the risks in extending the loan and is determined by various factors, including the amount of EFIC’s exposure and the proposed terms. The fee is payable either upfront on or before the date of the first drawing under the loan, or over the life of the loan by way of a margin on top of the agreed interest rate.
Other Fees and Charges Additionally, establishment and commitment fees are payable by the Borrower. The Borrower is also required to pay EFIC's costs, charges and expenses in connection with a Direct Loan facility such as, for example, break costs, duties, taxes, travel expenses and legal fees. Documentation Documentation required for any loan would typically include: - a credit agreement between EFIC and the Borrower;
- an export contract between the Exporter and the Buyer, in form and substance acceptable to EFIC;
- an exporter’s deed between EFIC and the Exporter; and
- any security documents.
DISCLAIMER This document is provided to give you an indication of the terms and conditions upon which EFIC may be willing to provide finance. 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.
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