US exporters are turning to letters of credit (L/Cs) as the Export-Import Bank of the United States (Exim Bank) remains closed for new business.

The US' Congress failed to reauthorise the 81-year-old bank on 30 June 2015, leaving exporters without the ability to provide their customers with credit facilities.

Competitive terms

Exporters have made good use of Exim Bank to provide competitive export financing on better terms than is available from commercial banks and to provide insurance for shipments abroad.

But Congress - both Democrats and Republicans - decided that the bank unfairly favoured US giants such as Boeing, Caterpillar and General Electric and issued a discharge petition that stopped the bank from writing new business.

L/C solution

According to the owner of Buffalo International, a small exporter of transmission lines and poles to customers in the UK, South America, Australia and Africa, traders are turning to L/Cs due to Exim Bank's circumstances.

"We have converted all of our customers from offering them credit to requiring L/Cs," Francois Petit told local media.

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