The Export-Import Bank, a bulwark of trade finance for U.S. middle market and smaller exporters, is now busy building some fresh initiatives to make the manufacturing sector more competitive in global markets.

One is a program to finance overseas dealers and distributors of capital equipment, which is expected to deliver a boost to exporters who rely on foreign re-sellers to market their products. Another is a revamped leasing strategy. And, Ex-Im recently reintroduced a package of improvements in its multi-buyer credit insurance policy, a mainstay of its middle market clientele.

Then, too, the U.S. agency is pushing country initiatives, in places where it figures a more aggressive trade finance strategy can produce significant export gains. Ex-Im's Iraq program has finally generated activity, and Africa remains a priority with growing success. Creating guaranteed credit lines in key markets is once again in the offing. Bank officials, including Chairman Philip Merrill and Vice Chair April Foley, have been hawking its wares in Moscow, Beijing, Istanbul, and Hanoi.

The dealer-distributor program, which has been in the works for a year, is expected to offer a seamless package that foreign dealers can use to finance their inventories of U.S. equipment (so-called "floor planning"), and then roll over the financial package when the machinery is sold out of inventory, offering extended payment terms to their customers (end-users).

Progress on the program's development has been closely watched. "It looks like it will be an exciting new tool for middle market exporters in emerging markets," says Peggy Houlihan, an export finance arranger (Houlihan International) in Reston, Virginia, who has helped a variety of firms tap government international programs. The Small Business Exporters Association, an advocacy group, considers the dealer facility a priority innovation.

Meanwhile, improvements in the Ex-Im Bank multi-buyer insurance program, which were adopted in 2003, but later withdrawn, were trotted out once again in April 2004 at the agency's annual Washington conference. Two key changes adopted include greater flexibility in the spread of risk covered, and a discounted cost that is now offered to exporters who use a package of working capital guarantees (pre-shipment finance) and the insurance.

Ex-Im is now giving exporters more choices in determining a "reasonable spread of risk" in the foreign receivables they agree to insure. For example, it is now possible to exclude sales to some individual countries, or to some top corporate customers, or to some prime customers. The specific package of buyers covered is negotiated.

Among country initiatives, Ex-Im Bank's Iraq program has finally produced its first transaction, supporting a $15 million sale of fogging machines for insect abatement to a unit of the Ministry of Health.

The program provides short-term insurance coverage for Letters of Credit issued by the Trade Bank of Iraq, and confirmed by JP Morgan Chase Bank. JP Morgan leads a consortium of about a dozen banks that were approved by the U.S.-led Coalition Authority to re-start the country's trade finance activities. Much of the business expected under the Ex-Im facility will be generated by U.S. and other donor funds. Ex-Im has an Iraq unit on its web site (www.exim.gov) to report regularly on business opportunities.

In Africa, the Bank helped finance $700 million in U.S. exports to the sub-Saharan region in 2003, the most it's ever done there. Ex-Im has built relationships with a group of banks (U.S., Europe, Africa) through which it provides guarantee and insurance programs.

A May 2004 deal, for example, comprised a $4 million medium-term guarantee to finance the sale of a butane and natural gas storage and bottling system to a buyer in Mali. Fifteen suppliers in South and North Carolina participated.

Also, Ex-Im officials told attendees at the April conference that it intends to re-start its guaranteed credit lines strategy. Typically, these involve credit facilities between a bank in the U.S. and one in an emerging market (say, Brazil or Turkey), or a facility approved for a large foreign buyer that generates a flow of deals over a year. Examples might be the Mexican oil company or a Mexican phone company.

In the past, Ex-Im Bank actively employed this strategy, but it got disenchanted when some banks rarely used their allocations, while tying up Ex-Im resources. But, having lines in place permits rapid decisions, with middle market and smaller exporters frequently the beneficiaries. So, the Bank is giving it another try.

Then too, the Washington agency is making some headway in broadening the range of lenders that deliver its programs. A new strategy involves working with smaller independent export finance companies that have struck an arrangement with the Private Export Funding Corporation (PEFCO) in New York. PEFCO relies on Ex-Im Bank guarantees to cover its credit risks.

The New York group has initiated a program to buy the short- and medium-term trade receivables of finance companies that have established master guarantee agreements with Ex-Im, an administrative structure that produces speedier Ex-Im approvals. In offering a secondary market for the Ex-Im guaranteed paper, PEFCO enables the finance companies to maintain liquidity and roll over their funds into additional deals.

Ex-Im and PEFCO, which have just begun doing business under this arrangement, see it as a way to do smaller transactions (which banks won't do) and work with smaller exporters that otherwise might find it difficult to locate lenders interested in their business.

But, Ex-Im has also been enjoying more success with banks that are expanding their export operations. The blockbuster story in 2003 was Toronto Dominion Bank, a large Canadian institution, which arranged 59 Ex-Im medium-term equipment deals that received $233 million in program coverage.

The Canadian lender decided to build a U.S. export business, opened a trade finance unit in Houston in 1995, later added a Baltimore unit, and shifted to a middle market strategy, landing business on the buyer side overseas as well as through active marketing of transactions in the U.S.