OFFICIAL EXPORT CREDIT FROM SPAIN

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Official export credit is a medium and long-term financing mechanism with favourable financial conditions for exports of machinery, capital goods, industrial plants, technology, power plants, hydroelectric plants, ships, aircraft, projects and/or technical services of Spanish origin.

This type of credit is officially supported and aims to accelerate foreign sales by providing financing to buyers or suppliers on favourable terms. There are two basic modalities: credit to the buyer, where the exporter collects the full amount financed in cash, and credit to the supplier, which allows financing to be offered on preferential terms and, on certain occasions, to discount the bills of exchange representing the deferred payment.

It is important to note that the financing can be granted at variable or fixed interest rates, and always in accordance with the regulations of the OECD Consensus and the Instituto de Crédito Oficial (ICO). In addition, Since these are medium or long-term financing operations, the financing bank will probably require the credit insurance cover granted by CESCE under satisfactory conditions.

In summary, official export credit is a valuable instrument for financing sales abroad, as it allows Spanish companies to access financing on favourable terms and accelerate their export processes.

Official export credit has a number of advantages and benefits for exporting companies, among which are

1. Favourable financial conditions: official export credit is backed by the state, which allows exporting companies to obtain financing on more favourable terms than they could obtain through a conventional loan.
2. Access to foreign markets: official export credit enables exporting companies to access foreign markets where they might otherwise find it difficult to compete.
3. Increased competitiveness: By making low-cost financing available, exporting companies can offer more competitive prices in international markets.
4. Expansion of production capacity: With official export credit, exporting companies can finance the acquisition of machinery, capital goods and other assets that will enable them to increase their productive capacity and improve their competitiveness.
5. Flexibility in payment terms: official export credit offers longer payment terms than those generally available on the market, allowing exporting companies to better adapt to the needs and requirements of their international customers.
6. Operational safety: the credit insurance required for such medium- and long-term operations provides greater security and protection for exporting companies.

In a nutshell, official export credit is a valuable tool for exporting companies wishing to expand in international markets, improve their competitiveness and increase their productive capacity.

To apply for an official export credit, the following steps must be followed:

1. Identify export financing needs: It is important to identify the goods or services to be exported, the export destination, the payment term and the amount to be financed.
2. Contact a bank or financial institution that offers this type of financing: In Spain, the Instituto de Crédito Oficial (ICO) is the organisation in charge of managing official export credits. There are also other banks and financial institutions that offer this type of financing.
3. Submit the application for funding: Once the bank or financial institution has been identified, the application for financing must be submitted, including detailed information on the export and the amount to be financed.
4. Evaluation of the application: The bank or financial institution will assess the application and, depending on the applicant's creditworthiness and ability to pay, will determine whether or not to approve the financing.
5. Signing of the financing contract: If the application is approved, a finance contract will be signed specifying the terms and conditions of the credit, including the term, interest rate, fees and collateral requirements.
6. Credit insurance: In order to obtain an official export credit, it is common to require the contracting of credit insurance. In Spain, the public insurance company CESCE offers this service.

It is important to note that the requirements and formalities may vary depending on the country and the financial institution chosen to apply for official export credit. Therefore, it is advisable to obtain detailed information on the specific process in each case.

To be eligible for export credit, it is necessary to meet certain requirements, which may vary depending on the institution granting the credit.

HOWEVER, SOME GENERAL REQUIREMENTS INCLUDE:

1. Be an exporting company or have concrete export plans.
2. Have good creditworthiness and ability to pay.
3. Have a well-defined and viable business plan.
4. Have a portfolio of solvent clients and a good reputation in the market.
5. To present a competitive exportable offer that complies with the quality and safety norms and standards required by international markets.
6. Have a good knowledge of international markets and the regulations and procedures necessary to export.
7. Present sufficient guarantees to support the credit granted.
8. Comply with the legal and regulatory requirements of the countries involved in the export operation.

It is important to note that each country and financial institution may have specific requirements for granting export credits, so it is advisable to research and seek appropriate advice before applying for credit.

Official export credit is a form of medium- and long-term export financing with official support on favourable financial terms. The official export credit system is an instrument of undoubted value for financing sales abroad.

Operations eligible for financing must be exports of machinery and capital goods, industrial plants, technology, power plants, hydroelectric plants, ships, aircraft, projects and/or technical services of Spanish origin.

There are two basic modalities

• Credit to the buyer. In this case, the exporter collects the full amount financed in cash.
• Supplier credit. This allows us to offer financing to the supplier under preferential conditions and, in addition, on certain occasions, we discount without recourse the bills of exchange representing the deferred payment.

TO TAKE INTO ACCOUNT:

• Interest rate: financing can be granted at both variable and fixed interest rates and always in accordance with the regulations of the OECD Consensus and the ICO (Instituto de Crédito Oficial).
• Credit insurance: as these are medium or long-term financing operations, the financing bank will probably require credit insurance cover granted by CESCE under satisfactory conditions.

One form of self-financing is international cash pooling, which allows you to manage the financing needs of one country with excess liquidity in other countries.