What is a transaction-based versus an asset-based EWCP loan?

A transaction-based EWCP loan finances specific export orders. An asset-based EWCP loan is a revolving line against foreign receivables and export inventory (SOP 50 10 8.1, Sec. B, Ch. 5, Para. B.5.a).

Transaction-based

• Supports one or several transactions during the loan term, revolving or non-revolving.
• Maximum advance: 90% of the purchase order or contract, or your costs including overhead, whichever is less (Para. B.8).
• The lender sets up a control account and applies foreign receipts against the balance.
• No field examination is required.

Asset-based

• Supported by a Borrowing Base Certificate, typically committed for 12 months and renewed annually.
• Maximum advance: 90% of eligible foreign receivables and 75% of eligible export inventory in the United States.
• A field examination is required before the first disbursement on loans of $1,000,000 or more. Loans of $2,000,000 or more need one at least annually.
• The section requires monthly certificates in one place and quarterly certificates for loans of $1,000,000 or less in another. Ask your lender which it follows.

Open-account sales

Without credit insurance or a letter of credit, the advance rate may not exceed 80%. A PLP-EWCP lender may go to 90% on uninsured receivables from creditworthy buyers or governments, with documentation (Para. B.8).

Receivable terms

Credit-insured and uninsured open-account receivables must not exceed 180 days from invoice. Those backed by acceptable letters of credit must not exceed 364 days (Para. B.8).