Buyer Credit Guarantee
Malaysian exporters can help the overseas buyer to secure a long-term financing with a lender using the Buyer Credit Guarantee (BCG). With this facility, the Malaysian exporter is paid as if he has a cash contract, whilst the overseas buyer has time to pay the contract through the financing secured from the lender, which is backed by EXIM Bank’s guarantee. EXIM Bank’s guarantee is unconditional and irrevocable in which the lending bank is guaranteed repayment of the principal and any interest due to it under the loan. If the borrower/buyer fails to pay any instalment in full or any interest/profit due, EXIM Bank pays the bank between 3 and 6 months after the date on which the borrower was due to pay.
Detailed information can be referred to Product Disclosure Sheet
Buyer Credit Guarantee
- The loan must be in support of a cash contract with minimum value of RM2 million or the foreign currency equivalent
- The credit or repayment period must be appropriate to the contract concerned which should be at least 2 years and the maximum repayment period allowed is 15 years
- The lending bank can finance up to 85% of the contract value, while the balance must be paid directly by the buyer to the exporter as down payment prior to the start of the credit period. Nevertheless, for public buyers, 100% financing is allowed
- The commercial contract must have a minimum Malaysian content of 30% in the form of goods and services
Premium rates primarily depend on EXIM Bank’s grading of the market with which the business is done and terms of payment. In general, the premium is dependent on market risk and credit terms.
Under the Buyer Credit Guarantee facility, disbursement is made directly to the exporter in accordance with the supply contract.
If the exporter fails to perform under the contract there is an increased risk that the buyer will not service or repay the financing facility granted by the lender. EXIM Bank will be liable to pay the bank for any borrower/buyer’s default.
However, it is not intended that EXIM Bank should suffer loss where the exporter is in breach of the terms of his contract or the premium agreement. EXIM Bank therefore has the right to take recourse to the exporter in such circumstances. This means EXIM Bank can claim from the exporter some or all of the money paid by EXIM Bank to the lending bank.
EXIM Bank needs to be satisfied that the exporter will be able to meet any recourse demand, which may be made. The lending bank or major subcontractor may be required to join the exporter’s recourse obligation.
Processing Fee of one percent (1%)* on the insured amount subject to a minimum of RM1,000 and a maximum of RM20,000 and payable upon accepting the LO. Should the insured amount be in a foreign currency, the Processing Fee would be applied accordingly in the foreign currency, with the minimum payment in foreign currency be equivalent to RM1,000 and a maximum of RM20,000.
(*) subject to Terms and Conditions. Not applicable to SMEs.