How the Working Capital Guarantee can unlock growth for U.S. exporters

When it comes to international growth, many U.S. manufacturers encounter a familiar friction point. They’re thrilled to see healthy overseas demand for their goods. They’re ready to export more products, enter new markets, and increase sales.

Yet they’re constrained by a common financial reality: obtaining adequate liquidity. 

The answer lies in a longstanding government-backed program, the Working Capital Guarantee from the U.S. Export-Import Bank (EXIM). This innovative solutions equips mid-market firms with the working capital needed to unlock cash flow, fulfill international orders, and take new business abroad. 

Government-backed loans can open new doors for mid-market exporters

The Working Capital Guarantee program originates with the EXIM Bank. Established in 1934, this self-sustaining U.S. agency exists to support American jobs, competitiveness, and economic security by enabling U.S. exports.

The Working Capital Guarantee is one of EXIM Bank’s flagship programs. It enables financial institutions like Wells Fargo to significantly increase lending capacity with qualified manufacturers and exporters. 

Under the program, EXIM Bank provides a 90 percent government guarantee on eligible working capital facilities. This backstop lets banks think differently about risk and underwriting, resulting in more opportunities—and more liquidity—for eligible U.S. companies.

A competitive advantage for qualified exporters

In practice, the Working Capital Guarantee can help qualified exporters:

• Borrow more funds without additional collateral requirements
• Finance receivables up to 120 days
• Obtain commercial credit to support first-time exports

Through this financing, exporters can establish credibility in overseas markets, mitigate credit and country risk, and even become more bankable with in the U.S. It’s all designed to fuel growth and help U.S. companies navigate international trade more easily.

Wells Fargo can underwrite directly up to $25 million per transaction. Banks with this delegated authority—as well as scale and expertise in global trade—can help companies move quickly to identify opportunities, obtain swift approvals, and maintain their global competitive advantage. (Deals above $25 million are eligible through Wells Fargo but may require additional EXIM Bank approvals.)

Unlocking liquidity for short- and long-term export growth

The Working Capital Guarantee fills the gap when a traditional credit facility or asset-based loan (ABL) can’t fulfill an exporter’s liquidity needs. 

An OEM used the Working Capital Guarantee to overcome short-term challenges with its supply chain. Faced with an unexpected disruption in their international channel, the OEM’s sales declined while expenses increased. It left them with a significant cash shortfall that was outside the scope of their traditional credit line.

Wells Fargo helped the OEM access incremental liquidity based on their overseas sales. Through the Working Capital Guarantee, they achieved a 90 percent advance rate on export receivables and a 75 percent advance on inventory, including work in progress. This much-needed infusion of cash helped them weather their supply chain issues. 

Another exporter, a technology company, leveraged the Working Capital Guarantee to finance rapid growth in one of their product lines. Their ABL facility—designed primarily for domestic operations—wasn’t the right fit to support their international sales. The Working Capital Guarantee injected the necessary liquidity to grow in foreign markets.

Reducing cash collateral requirements on standby letters of credit

Other exporters free up liquidity for growth by using the Working Capital Guarantee for situations that involve standby letters of credit (LCs). International contracts often require these instruments of trade as a performance guarantee, bid bond, or advance payment. 

Through the EXIM Bank program, banks like Wells Fargo can issue standby LCs with as little as 10-25 percent cash collateral from an exporter, compared to up to 100 percent without the Working Capital Guarantee. This flexibility helps mid-market firms pursue larger opportunities and retain their valuable working capital for other activities. 

Treating exports as a source of strength—not a credit risk

Many types of-U.S. based growers, producers, and manufacturers can benefit from the Working Capital Guarantee. It’s particularly useful for rapidly growing, emerging middle market companies. 

Ideal borrowers for the Working Capital Guarantee must:

• Export goods or services with at least 50 percent U.S. content 
• Warehouse inventory in the U.S.
• Ship products from U.S. ports
• Generate meaningful export revenue or be scaling internationally
• Require additional working capital for international growth

In today’s truly global market place where exports are no longer a niche activity, the Working Capital Guarantee lets banks recognize export-driven revenue as what it truly is: a source of strength rather than an incremental risk. It’s another promising tool for exporters to address short-term challenges and create more resilient, long-term futures.