The U.S. Export-Import Bank on Wednesday approved its fourth supply chain finance transaction and will guarantee up to 90 percent of $450 million in liquidity offered by a JPMorgan Chase loan to suppliers of Caterpillar.
In specific, the bank’s guarantee will support small business suppliers by improving their liquidity, thereby allowing them to fulfill new orders.
The Supply Chain Finance guarantee allows JPMorgan to increase its purchases of accounts receivable owned by U.S. suppliers and due from Caterpillar and that are related to purchases of goods and services by the heavy equipment manufacturer for its export-related production.
Ex-Im Bank said the program is designed to help qualified Caterpillar suppliers “obtain cash more quickly and increase liquidity to fulfill new orders.” Exporters have the option to extend payment terms and obtain a working capital benefit without imposing undue financial hardship on their suppliers.
"This supply chain financing partnership between J.P. Morgan and Caterpillar, supported by Ex-Im, will help dozens of small businesses obtain the working capital that they need to thrive and create jobs,” said Dani Cotti, head of global trade for J.P. Morgan, in a statement. “It’s a win for everyone involved.”
To participate in the Ex-Im Bank program, approved lenders must have an existing supply-chain finance program. The bank requires that at least 50 percent of the credit provided under the program be extended to suppliers meeting the small business definition of the Small Business Administration. Additionally, the exported products must meet U.S. content requirements.