Strengthening America’s Supply Chains with EXIM’s Make More in America Initiative
The COVID-19 pandemic and recent global events have exposed long-standing holes in America’s supply chains, including insufficient manufacturing capacity, the erosion of the United States’ export industrial base, and competition with China and other countries. These structural weaknesses in both domestic and international supply chains threaten America’s economic and national security. Solving these challenges, fostering economic resilience, and revitalizing America’s manufacturing and export capacity requires the United States to use all the tools in our toolkit – including the Export-Import Bank.
From Day One, President Biden has prioritized addressing these longer-term weaknesses in our nation’s supply chains, the result of decades of underinvestment, outsourcing, and offshoring instead of investment in long-term security, sustainability, and resilience.
In February 2021, President Biden signed Executive Order 14017 directing an all-of-government approach to assessing vulnerabilities in – and strengthening the resilience of – the United States’ critical supply chains. From that Executive Order, the White House released findings from its comprehensive 100-day supply chain assessments for four critical products: semiconductor manufacturing and advanced packaging; large capacity batteries, like those for electric vehicles; critical minerals and materials; and pharmaceuticals and active pharmaceutical ingredients.
Included in the recommendations was the following:
Examine the ability of the U.S. Export-Import Bank to use existing authorities to support U.S. manufacturing of products: EXIM should develop a proposal for Board consideration regarding whether EXIM should establish a new Domestic Finance Program that would provide financing to support the establishment and/or expansion of U.S. manufacturing facilities and infrastructure projects in the United States that would facilitate U.S. exports.
EXIM subsequently consulted with a variety of stakeholders and policy experts to identify gaps in private sector financing for critical manufacturing sectors and prepare a plan that leverages EXIM's existing tools, through direct loans, loan guarantees, and insurance, in innovative ways for specific types of domestic manufacturing projects with an export nexus.
EXIM Financing to Make More in America
Too many American manufacturers in sectors critical to America’s national security – especially small- and medium-sized enterprises – struggle to obtain financing to compete for global sales. EXIM is well positioned to address this issue, while supporting jobs in America.
To help companies make more in America – especially in sectors critical to national security – EXIM will make available the agency’s existing medium- and long-term loans, loan guarantees, and insurance to export-oriented domestic manufacturing projects.
The new tool will be open to all sectors, with financing priority available to environmentally beneficial projects, small businesses, and transformational export area transactions, including semiconductors, biotech and biomedical products, renewable energy, and energy storage. This Initiative will help revitalize American manufacturing, improve the resiliency of our supply chains, and level the playing field for American companies competing in overseas markets.
By complementing EXIM’s foreign buyer financing programs, EXIM can spur growth and security of critical supply chains while continuing to meet EXIM’s core mission of supporting U.S. jobs. Such financing will help support American companies across the entire export lifecycle.
In addition to EXIM’s standard due diligence procedures and additionality requirements, EXIM will follow two core criteria in assessing project eligibility:
Export Nexus: Transaction eligibility will be determined by the “export nexus” – the percentage of production or shipments tied to exports.
- For small businesses (including minority and women-owned business), transformational export areas, and climate-related transactions, the required nexus is 15 percent.
- For projects in other sectors, 25 percent of output exported or expected to be exported will be required.
- The new tool will also be open to export suppliers as well, if EXIM criteria are met regarding the export nexus standards.
Jobs: The amount of EXIM financing made available for individual projects will be scaled based on the number of U.S. jobs supported, both during construction and over the life of EXIM’s financing.
- Each job-year (e.g., one job over five years is five job-years) allows for up to $189,242 in financing.
- This standard will replace the U.S. content required in traditional EXIM transactions to foreign buyers.
Reasonable Assurance of Repayment: EXIM is directed by Congress to underwrite to a “reasonable assurance of repayment” standard. For non-project finance transactions, EXIM will generally require:
- A minimum three-year revenue producing history in the same line of business
- Proven debt service capacity, based on prior financial performance and ability to meet EXIM’s credit standards
- A loan amount not disproportionate to the size of the company (in terms of financial resources and business operations); in general the loan should not be more than 40% of tangible net-worth of the borrower
For project finance transactions, please see EXIM’s Approach to Project Finance for details
Commitment to Transparency and Stewardship of Taxpayer Resources
To ensure the Make More in America Initiative remains complementary to private sector and other government financing, upholds high standards of transparency, and fulfills the agency’s stewardship of taxpayer dollars, EXIM is taking several important steps. These include:
- Approval from EXIM’s Board of Directors for all domestic finance transactions.
- Congressional notification for domestic finance transactions above $50 million.
- Annual reporting on aggregate export and jobs performance, with contractual recourse measures should projects fail to meet export nexus and/or jobs standards.
- Board approval for any modifications to the initiative.
- Use of U.S. flagged shipping for any EXIM-supported imports for a project.
- Limiting EXIM support to 80 percent of a project’s financing, lower than the 85 percent allowed under the OECD Arrangement.
- Regular initiative reviews.
Apply for the Initiative here: Domestic.Finance@exim.gov