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Buyer Credit Guarantee

​A Buyer Credit Guarantee may help secure an order for a Danish company if the customer abroad needs credit to pay for the order. The guarantee provides the bank with security for the credit facility.​


  • Advantages of Buyer Credit Guarantee

    Advantages for you as an exporter
    You can help your buyer secure credit for placing orders with you. With a Buyer Credit Guarantee, your bank will be happy to give your buyer credit.

    As the exporter, you have no financing risks, as you are not a party to the financing. You will also receive your money as soon as you fulfill the order.

    Buyer Credit Guarantees are subject to no maximum amount and can therefore be used to cover large, million-figure orders. 
    Advantages for you as a buyer of Danish goods
    You get access to an attractive loan from a Danish or foreign bank. You can obtain credit for up to 18 years. Thus, you can buy the products you want for your business to grow – as long as it is from a Danish company.
     
    Advantages for you as a bank
    You can increase your business volume by issuing a loan on which you receive interest as always, but without incurring all the risk. If something goes wrong, EKF covers most of the loss.
  • What is Buyer Credit Guarantee?

    A Buyer Credit Guarantee guarantees payment to a bank that grants a loan to a foreign buyer. This means that when negotiating an order with a buyer, the exporter can offer the buyer help with obtaining credit. The loan may only be used for buying the exporter’s products. The buyer takes out the loan with either a Danish or foreign bank.
     
    EKF issues a Buyer Credit Guarantee to the bank. With the EKF guarantee, the bank is sure that it will recover its money. EKF pays compensation to the bank if the payments from abroad are not made as agreed.
    For example, if the foreign buyer is unable or unwilling to pay, if the money cannot be transferred out of the country, or if war or civil war breaks out in the country.
     
    This financing solution is a good selling point for Danish exporters negotiating contracts abroad. If they are able to offer a competitive loan and reliable product, there is every chance of making a sale.
  • How does Buyer Credit Guarantee work?

    ​EKF issues a guarantee to a Danish bank or a foreign bank to cover the risk of the credit being offered. By doing so, we take over the main part of the risk.
    ​With the backing of EKF, the bank will be able to offer your customer a credit. The customer can now afford to place an order with your company. Although the customer is being offered a credit, you will be paid immediately.
  • What does Buyer Credit Guarantee cost?

    EKF charges a premium for issuing a Buyer Credit Guarantee. We calculate the premium on the basis of the overall risk of the specific export transaction. The following parameters are assessed:
     
    The buyer’s creditworthiness: EKF rates the buyer’s creditworthiness, i.e. the likelihood that the customer will pay. The higher the creditworthiness, the lower the premium.
     
    The political situation in the buyer’s country: EKF assesses the risk of political unrest in the buyer’s country. The lower the risk of political unrest, the lower the premium.
     
    Credit period: The credit period is the number of months the buyer will take to repay the loan. The shorter the credit period, the lower the premium.
    ​For amounts of less than DKK 25 million, we follow a fixed premium model. This ranges from 0.2% p.a. for the least expensive to 4.25% p.a. for the most expensive.
     
    For guarantees of more than DKK 25 million for a buyer from an OECD country, EKF determines the premium on a case-by-case basis.
     
    In addition, the buyer pays loan interest and costs to the bank. The premium payable to EKF can be included in the financing as part of the loan.
  • Terms & conditions regarding Buyer Credit Guarantee

     
    Who is eligible for a Buyer Credit Guarantee?
    EKF issues a Buyer Credit Guarantee to a Danish or foreign bank so the bank obtains security for a loan to the buyer. To be eligible, the buyer must be from outside Denmark. EKF must rate the foreign buyer as creditworthy before issuing any guarantee.
     
    What is the limit on a Buyer Credit Guarantee?
    No limits are applied.
     
    What is the term?
    The term of a Buyer Credit Guarantee is up to
    - 8.5 years in countries defined by the OECD as high-income countries
    - 10 years in all other countries
    - 12 years for power plants (all countries)
    - 18 years for renewable energy and hydro projects (all countries)
     
    Conditions
    The foreign buyer is normally required to pay at least 15% of the order amount in advance. The credit should be granted as a serial loan with principal repayments of equal size plus accrued interest. 
    Environmental and social sustainability requirements
    EKF assesses the environmental risks and risks related to human rights in the transaction. The risk assessment is based on IFC standards and guidelines.


    What does EKF cover?

    EKF pays out compensation if the Danish company or the bank makes a loss on an export transaction or investment abroad as a result of commercial or political risks.

     
    Commercial risk occurs in case of non-payment by the buyer due to liquidation, insolvency or cancellation of the contract.
     
    Political risk occurs when the exporter does not receive payment for products due to impediments in the foreign country. Such impediments include war or civil war, currency shortage, restrictions on use of currency, import or export bans, and interventions by local authorities that make it impossible to receive payment for the products.
     
    EKF covers up to 95% of the bank’s loss, so the bank’s deductible is a minimum of 5%.

Advantages of Buyer Credit Guarantee

Advantages for you as an exporter
You can help your buyer secure credit for placing orders with you. With a Buyer Credit Guarantee, your bank will be happy to give your buyer credit.

As the exporter, you have no financing risks, as you are not a party to the financing. You will also receive your money as soon as you fulfill the order.

Buyer Credit Guarantees are subject to no maximum amount and can therefore be used to cover large, million-figure orders. 
Advantages for you as a buyer of Danish goods
You get access to an attractive loan from a Danish or foreign bank. You can obtain credit for up to 18 years. Thus, you can buy the products you want for your business to grow – as long as it is from a Danish company.
 
Advantages for you as a bank
You can increase your business volume by issuing a loan on which you receive interest as always, but without incurring all the risk. If something goes wrong, EKF covers most of the loss.

What is Buyer Credit Guarantee?

A Buyer Credit Guarantee guarantees payment to a bank that grants a loan to a foreign buyer. This means that when negotiating an order with a buyer, the exporter can offer the buyer help with obtaining credit. The loan may only be used for buying the exporter’s products. The buyer takes out the loan with either a Danish or foreign bank.
 
EKF issues a Buyer Credit Guarantee to the bank. With the EKF guarantee, the bank is sure that it will recover its money. EKF pays compensation to the bank if the payments from abroad are not made as agreed.
For example, if the foreign buyer is unable or unwilling to pay, if the money cannot be transferred out of the country, or if war or civil war breaks out in the country.
 
This financing solution is a good selling point for Danish exporters negotiating contracts abroad. If they are able to offer a competitive loan and reliable product, there is every chance of making a sale.

How does Buyer Credit Guarantee work?

​EKF issues a guarantee to a Danish bank or a foreign bank to cover the risk of the credit being offered. By doing so, we take over the main part of the risk.
​With the backing of EKF, the bank will be able to offer your customer a credit. The customer can now afford to place an order with your company. Although the customer is being offered a credit, you will be paid immediately.

What does Buyer Credit Guarantee cost?

EKF charges a premium for issuing a Buyer Credit Guarantee. We calculate the premium on the basis of the overall risk of the specific export transaction. The following parameters are assessed:
 
The buyer’s creditworthiness: EKF rates the buyer’s creditworthiness, i.e. the likelihood that the customer will pay. The higher the creditworthiness, the lower the premium.
 
The political situation in the buyer’s country: EKF assesses the risk of political unrest in the buyer’s country. The lower the risk of political unrest, the lower the premium.
 
Credit period: The credit period is the number of months the buyer will take to repay the loan. The shorter the credit period, the lower the premium.
​For amounts of less than DKK 25 million, we follow a fixed premium model. This ranges from 0.2% p.a. for the least expensive to 4.25% p.a. for the most expensive.
 
For guarantees of more than DKK 25 million for a buyer from an OECD country, EKF determines the premium on a case-by-case basis.
 
In addition, the buyer pays loan interest and costs to the bank. The premium payable to EKF can be included in the financing as part of the loan.

Terms & conditions regarding Buyer Credit Guarantee

 
Who is eligible for a Buyer Credit Guarantee?
EKF issues a Buyer Credit Guarantee to a Danish or foreign bank so the bank obtains security for a loan to the buyer. To be eligible, the buyer must be from outside Denmark. EKF must rate the foreign buyer as creditworthy before issuing any guarantee.
 
What is the limit on a Buyer Credit Guarantee?
No limits are applied.
 
What is the term?
The term of a Buyer Credit Guarantee is up to
- 8.5 years in countries defined by the OECD as high-income countries
- 10 years in all other countries
- 12 years for power plants (all countries)
- 18 years for renewable energy and hydro projects (all countries)
 
Conditions
The foreign buyer is normally required to pay at least 15% of the order amount in advance. The credit should be granted as a serial loan with principal repayments of equal size plus accrued interest. 
Environmental and social sustainability requirements
EKF assesses the environmental risks and risks related to human rights in the transaction. The risk assessment is based on IFC standards and guidelines.


What does EKF cover?

EKF pays out compensation if the Danish company or the bank makes a loss on an export transaction or investment abroad as a result of commercial or political risks.

 
Commercial risk occurs in case of non-payment by the buyer due to liquidation, insolvency or cancellation of the contract.
 
Political risk occurs when the exporter does not receive payment for products due to impediments in the foreign country. Such impediments include war or civil war, currency shortage, restrictions on use of currency, import or export bans, and interventions by local authorities that make it impossible to receive payment for the products.
 
EKF covers up to 95% of the bank’s loss, so the bank’s deductible is a minimum of 5%.
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