INSIGHTS

Export Credit Agency

What Is an Export Credit Agency?

Export Credit Agencies are organizations established to support exporters in their countries. The main purpose of ECA Credits is to protect the exporters of the relevant country against commercial, political, foreign exchange regime and other risks and to encourage exports. For this purpose, medium and long-term credit opportunities are provided to the buyers to whom the exporters sell, at an affordable cost. While doing this, the relevant insurance companies can insure approximately 95% of the transactions, and in some cases 100%. In such loans, financing can be provided with maturities between 2 and 10 years, depending on the nature of the goods to be imported. The exporter company receives the cost of the goods in advance, while the buyer makes the payment on a deferred basis.

How Does ECA Finance Work?

Most of the export credit institutions have been established to obtain medium-term financing between 2 and 5 years and long-term financing between 5-10 years. In some cases, some can specialize in the short term, in less than 2 years. It is important to note that credit, insurance and guarantee risks are almost always a factor dependent on the sponsoring borrower.

Export Credit Agencies generally restrict financing from countries that are not creditworthy in order to control risk efficiently. Additionally, as these transactions are prone to a significant amount of risk compared to normal transactions, communities of government officials and ECA officials are examining larger and more complex financing efforts.

Officially incentivized export credit is dependent on official development assistance, which is regulated by the Organization for Economic Cooperation and Development (OECD). In this way, it has provided an environment in which export credit institutions can act legally in cases where the regulation sets out the export credit terms and conditions that can be officially supported. However, it is ensured that competition is not based on the financial conditions provided, but on the price and quality of the exported goods. Moreover, theoretically speaking, it should eliminate the excessive subsidies and trade distortions associated with officially backed export credits.

What Is the Purpose of Export Credit Insurance?

Export Credit Insurance is a type of insurance that insures exporters’ export value receivables against commercial and political risks. In addition to providing collection assurance against arbitrary and political risks, it conducts risk analyses about buyer companies and their countries, examines existing risks, and provides financing by discounting risk-free receivables. Moreover, the purpose of the Pre-Shipment Export Credit Insurance program is to insure the expenditures made during the production phase of the investment goods to be exported against the risk of cancellation of the order by the buyer.

How Long Does the ECA Process Take?

Currently the approximate processing timeframe for an ECA is within 20 weeks. Evaluations that require additional investigation or further investigation to external authorities may take longer than the time allocated. Timelines only begin after receiving official documents from educational institutions and meeting all requirements including full payment and other outstanding payments. For customers who have received a completed Basic or Extended Assessment based on official documentation, the estimated time available is 4 weeks. This only applies if the same credential is used. If the previous assessment was based on original documents, it will count as a new application and the above 20-week timeline will apply.

How Do I Get ECA?

In order to get an ECA credit, you need to meet some conditions and apply to the necessary banks or lending institutions.


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INSIGHTS

Export Credit Agency

What Is an Export Credit Agency?

Export Credit Agencies are organizations established to support exporters in their countries. The main purpose of ECA Credits is to protect the exporters of the relevant country against commercial, political, foreign exchange regime and other risks and to encourage exports. For this purpose, medium and long-term credit opportunities are provided to the buyers to whom the exporters sell, at an affordable cost. While doing this, the relevant insurance companies can insure approximately 95% of the transactions, and in some cases 100%. In such loans, financing can be provided with maturities between 2 and 10 years, depending on the nature of the goods to be imported. The exporter company receives the cost of the goods in advance, while the buyer makes the payment on a deferred basis.

How Does ECA Finance Work?

Most of the export credit institutions have been established to obtain medium-term financing between 2 and 5 years and long-term financing between 5-10 years. In some cases, some can specialize in the short term, in less than 2 years. It is important to note that credit, insurance and guarantee risks are almost always a factor dependent on the sponsoring borrower.

Export Credit Agencies generally restrict financing from countries that are not creditworthy in order to control risk efficiently. Additionally, as these transactions are prone to a significant amount of risk compared to normal transactions, communities of government officials and ECA officials are examining larger and more complex financing efforts.

Officially incentivized export credit is dependent on official development assistance, which is regulated by the Organization for Economic Cooperation and Development (OECD). In this way, it has provided an environment in which export credit institutions can act legally in cases where the regulation sets out the export credit terms and conditions that can be officially supported. However, it is ensured that competition is not based on the financial conditions provided, but on the price and quality of the exported goods. Moreover, theoretically speaking, it should eliminate the excessive subsidies and trade distortions associated with officially backed export credits.

What Is the Purpose of Export Credit Insurance?

Export Credit Insurance is a type of insurance that insures exporters’ export value receivables against commercial and political risks. In addition to providing collection assurance against arbitrary and political risks, it conducts risk analyses about buyer companies and their countries, examines existing risks, and provides financing by discounting risk-free receivables. Moreover, the purpose of the Pre-Shipment Export Credit Insurance program is to insure the expenditures made during the production phase of the investment goods to be exported against the risk of cancellation of the order by the buyer.

How Long Does the ECA Process Take?

Currently the approximate processing timeframe for an ECA is within 20 weeks. Evaluations that require additional investigation or further investigation to external authorities may take longer than the time allocated. Timelines only begin after receiving official documents from educational institutions and meeting all requirements including full payment and other outstanding payments. For customers who have received a completed Basic or Extended Assessment based on official documentation, the estimated time available is 4 weeks. This only applies if the same credential is used. If the previous assessment was based on original documents, it will count as a new application and the above 20-week timeline will apply.

How Do I Get ECA?

In order to get an ECA credit, you need to meet some conditions and apply to the necessary banks or lending institutions.