What are the exporters saying?
“Our company is the producer of process lines. The production of such lines takes at least several months and process lines are often custom designed for a particular recipient. We usually expect a high prepayment. However, such an approach hinders our sales. Sometimes, potential clients mention 5-year loans for the purchase of such equipment offered by our rivals. We often wonder how payment security can be combined to meet with such expectations.”
“The machines and equipment produced by our company comply with the requirements of the international tender of a large company from the Balkans. The value of a potential contract is significant. We would very much like to participate in it, however, one of the tender conditions also involves presenting a 7-year financing offer apart from an offer of supply. Hence, we are looking for a solution that would give us the means to achieve this.”
“We are a construction company. Our business profile covers building, conversion and renovation work, as well as general contractor services. We have participated in economic missions to Iran and African countries. These markets have great needs in terms of the construction of infrastructure, which our company can successfully satisfy. However, all potential counterparties talk about ECA financing and export credits for the contract execution term, plus another 10-12 years. The acquisition of such contracts requires support from specialised state institutions.”
Buyer credit insurance
Export of capital goods like machinery, devices, process lines, means of transport or the performance of general contractor services for turnkey facilities is often connected with the expectation on the part of potential contractors for exporter offers to be provided alongside offers for long-term financing. In conditions of growing competition, it is increasingly more often not the very price, quality or credibility of the contractor that is decisive in selecting a given offer but the actual securing of financing. A solution to this is the export credit insurance in the form of a buyer credit.
Buyer credit is provided by the bank of the exporter to a specified importer for the purchase of goods or services performed under an export contract. Credit tranches are paid out to the Polish exporter once a set of pre-defined, supporting documents have been presented confirming the performance of contractual obligations. After the completion of the delivery or services, the credit is repaid by the importer with a prolonged repayment date. The maximum, admissible repayment term depends on the type of financed project with on average 5 to 10-year insurance cover. Thanks to this instrument, the offer for a supply contract is presented alongside the financing offer.
Government Program Supporting Exports
Within the programme, Bank Gospodarstwa Krajowego grants loans to foreign buyers (directly or through the buyer’s bank) for financing the purchase of Polish goods and services. The funds are disbursed directly to the domestic exporters, while the foreign buyers, after the delivery of the goods or services, reimburse the loans. The financing extended to foreign borrowers is secured by KUKE, the Export Credit Insurance Corporation Joint Stock Company, which underwrites political and trade risks. BGK also grants credits directly to Polish exporters in order to finance export contracts.