Export Credit Program
1 - Q. What is Export Credit Guarantee?
A. Export Credit guarantee is an incentive for the encouragement and development of exports by providing insurance coverage to the exporters of national commodities and services who sell on credit terms against non-payment by their importers. Non-payment may be due to importer's insolvency, protracted default, non-acceptance of goods, economic and political conditions that are out of the exporter’s and importer’s control, or due to procedures undertaken by the authorities in the importer's country, which may prevent the exporter from obtaining his dues from the importer
2- Q. What are the risks covered by the Jordanian export credit guarantee scheme?
A. The Jordanian export credit guarantee scheme covers the following commercial and non-commercial risks:
- Bankruptcy or forced liquidation of the importer.
- Failure of the importer to effect payment to the exporter despite the latter having met all his obligations.
- Refusal or abstention of the importer to receive the shipping documents of the shipped goods in spite of the exporter's fulfillment of all his obligations towards the importer.
- The cancellation of the import license by the authorities of the importer's state or its suspension, non-renewal, or their refusal to allow the goods into the state.
- Seizure by the importer's state of the shipped goods or their detainment or confiscation.
- Prevention, whether directly or indirectly, by the authorities of the importer's state or by the state through which payment shall be made, of the exporter obtaining his dues from the importer on the due date.
- Taking any measures by the authorities of the importer's state against the importer that would result in failure or prevention of importer from paying his dues to the exporter such as, expropriation and nationalization.
- Taking measures, whether based on a law, a decree, a regulation, or a decision that would fundamentally impede the ability to transfer the value of the shipped goods into the payment currency. These measures include refusing or delaying the approval of the transfer.
- Wars and civil disturbances that would have directly lead to the importer's failure or delay in paying the amounts due to the exporter.
3- Q. What are the benefits and advantages of the Jordanian export credit guarantee scheme carried by JLGC for Jordanian exporters and producers?
A. This scheme offers the following advantages:
- Prevention against non-payment risks, thus encouraging penetration into higher-risk foreign markets.
- The credit guarantee cover assists the exporters to sell safely on credit terms, thus increasing their competitiveness through the offer of credit facilities to customers without insisting on cash payment or confirmed LC opening.
- Helping the exporter in obtaining financing with more favorable conditions by discounting commercial papers while assigning the rights of compensation to the bank.
- Obtaining adequate compensation of the loss value.
4- Q. What are the benefits and advantages of the Jordanian export credit guarantee scheme carried by JLGC for Jordanian banks?
A. This scheme offers the following advantages:-
- The bank does not bear any loss in case of any covered loss is realized, JLGC compensates the bank against realized risks up to 90% of incurred loss, and the insured exporter bears 10% .
- The bank does not bear any responsibility in studying the credit assessment of the foreign importer as the case in ordinary loans; it is the responsibility of JLGC and the re-insurance company.
- There would be no any chance for dispute regarding payment of compensation in case of any covered loss is realized, as the bank pays the value of shipped goods upon receiving a letter from JLGC states that the shipped consignment is eligible in accordance to the guarantee contract signed with the covered exporter. JLGC would issue such letter upon receiving a letter from the importer or local merchant states that he received the goods and undertakes to pay its value on due date in the account of the financing bank .
- The financing bank has a very limited role in marketing, as the bank finances the exports covered by JLGC guarantee. In some cases, the bank advises his exporter or producer customers to cover their exports or local sales credit by JLGC guarantee.
- The Jordanian banks can benefit from JLGC data base for the credit assessment of local merchants, gathering data at JLGC commenced more than 15 years ago. At the same time they could benefit from the database of the re-insurance companies JLGC dealing with.
- Export Credit guarantee scheme helps the exporters to increase both their exports and local sales, thus they can fulfill their obligations towards the banks.
5- Q. Does JLGC provide guarantee cover for credit sales in the local market and export credit to all countries?
A. JLGC provides credit insurance cover to a wide spread of countries worldwide, and also insurers domestic sales provided that the goods or services are of Jordanian origin, and the local buyer is not the last consumer of the products under guarantee. However, JLGC would inform the exporter about the reasons for rejecting coverage exports to any country.
6- Q. what is the maximum credit limit?
A. JLGC assigns a credit limit for each importer or local merchant accepted to be covered. This limit represents the maximum liability of the company for payment of compensation. The level of the limit is set at the maximum amount that can be owed by the buyer at any time. The credit limit is the maximum covered credit line for a specific buyer, which operates on revolving basis, and the covered party can trade within the approved credit limit throughout the contractual period without further reference to JLGC.
7- Q. What is the insured percentage under credit guarantee contract?
A. The insured percentage is up to 90% of loss against commercial risks and non-commercial risks.
8- Q. Why does JLGC charge premium on total business declared, when it exceeds the credit limit amount?
A. As per the guarantee contract, the premium is payable on actual export and domestic sales made to various buyers on whom credit limit have been issued and not on the credit limit amount. However, JLGC charges premium on sales declared by the covered party in excess of credit limit due to the fact that those export sales made in excess of credit limit also be automatically covered once previous shipments are paid. If no premium is charged on those sales, it is off cover in accordance with the terms of the guarantee contract in the event of non-payment by the buyer.
9- Q. what is the Premium rate for JLGC export credit guarantee?
A. Premiums rate vary depending on the trading history and historical debt loss of the exporter seeking JLGC cover, as well as JLGC risk assessment. However usually the premium is charged to the importer or local merchant.
10- Q. What type of risks covered under the domestic credit guarantee?
A. JLGC covers the risks on the insolvency of the buyer as well as failure of the buyer to pay the seller the value of goods sold and accepted by the buyer.
11- Q. How does the Export Credit contract of JLGC help to raise finance?
A. The export credit guarantee contract is normally recognized by commercial banks as a valuable form of an additional security. Thus the covered party can obtain financing with more favourable conditions by discounting commercial papers while assigning the rights of compensation to the bank without recourse to the covered party in case any covered is realized.
Domestic Credit Insurance Programme
1- Q. What is the purpose of the Domestic Credit Insurance Programme ?
A. It’s a program that guarantees to local manufacturers and industries or their banks the payment of their sold goods by local buyers.
2- Q. What are the benefits this programme provides?
A. This programme provides the Jordanian traders with a guarantee of 90 % of the value of goods sold to local buyers, and encourage them to expand their local market.It assists them in obtaining the necessary financing they need from local banks.Offers them the financial information about their local customers and their ability to repay their debts.
3- Q. What Are The benefits to the local buyers ?
A. This program offers local buyers the guaranteed commercial credit they need from the local manufacturer with easier credit conditions for their bought goods.
Industrial finance Guarantee & Financial Leasing Guarantee - EJADA
1- Q. What are the objectives of the two Schemes?
- To improve the general access of small and medium sized enterprises (SMEs) to medium and long-term credits.
- To address the concerns of banks operating in Jordan regarding SMEs' lack of collateral and encourage credit appraisals which place greater emphasis on a borrower's/ lessee's ability to repay from cash flow rather than on the ability to provide tangible collateral.
2- Q. What is the purpose of the two Schemes?
A. Helping small and medium sized enterprises to get a medium and long- term credit from banks and leasing companies by encouraging them to finance these projects based on economic viability and cash flows and JLGC guarantee
3- Q. Who benefits from this program?
A. All existing SMEs enterprises which work in the industrial and services sector and operating in Jordan as a profit making enterprises, fully owned by the private sector with a maximum of 250 employees and minimum of 5 employees.
4- Q. Whatare the purposes accepted forguarantee?
- Loans may only be approved for the purchase, renovation or extension of premises, the cost of machinery and equipment, working capital and up to 15% of costs of professional fees and services related to the project for which the loan is sought.
- Working capital may constitute up to 25% of total project costs, however, where working capital exceeds 10% of total project cost, the re-payment term set for the loan must reflect the shorter-term nature of working capital financing.
5- Q. What is the purpose accepted for guarantee with respect to renewable loans?
A. For the purpose of letters of credit to import raw materials for manufacturing purposes and the financing of local purchases of materials used for manufacturing for the sectors approved for the guarantee.
6- Q. What is the excluded Activities?
A. The following types of loans will not qualify for guarantees:
- Primary agricultural production. Food processing activities are eligible
- Banking, insurance, financial services
- Loans granted to finance existing credit portfolios of financial institutions or to guarantee the renewal or extension thereof.
- Tobacco and tobacco products
- Beverages with alcoholic.
- Manufacturing or selling munitions articles or services
How to apply:
Industrial finance Guarantee & Financial Leasing Guarantee - EJADA
If you are a small or medium-sized company (industrial, productivity) and you need to get credits
(Medium or long-term loan) for financing the purchasing of fixed assets or to make renovation or extension of premises, decide the purpose of the loan,prepare a feasibility study,financial statements for the project to be ready as an initial step.
Since all JLGC Loan guarantee applications must be submitted through the Participating banks, review the list of Participating Banks to make sure that your bank has an active relationship with JLGC, then apply your application through your bank who should first check that your application meets the criteria of the schemes
If an application meets the eligibility criteria and the PB is satisfied that the loan applicant has the ability to repay from cash flow, the PB should seek a guarantee approval from JLGC by forwarding the completed documentation to JLGC.
If the guarantee is acceptable by JLGC and there is an acceptance by the bank of the guarantee conditions, review the PB to complete the required procedures, such as signing of contracts.