Apply for a guarantee? Please click green button to the right.
The supplier's credit guarantee provides protection from losses on credits exteded to a foreign buyer in connection with purchase of Norwegian goods or services. The guarantee covers the risk of non-payment by the customer in connection with individual deliveries.
Normally the exporter makes an application to GIEK who issues the guarantee directly to the exporter. The credit may be furnished directly by the exporter or financed by a bank. In the latter case the guarantee may be assigned to the bank as security for the financing. The supplier's credit guarantee is generally used for credits with a term of less than five years and/or credits involving relatively small amounts.
The supplier's credit guarantee may be issued in Norwegian kroner or in any other internationally accepted currency.
The conditions of sale and credit must comply with the OECD Consensus Agreement as regards cash payment, term, instalment plan, etc. The OECD rules do not apply to credits of less than two years. If the credit is for two years or more, there must be a cash contribution of at least 15 %, in other words the maximum financing must not exceed 85 %, and the loan must be repaid in equal semi-annual instalments from the time of consolidation.
The guarantee may cover both commercial and political risk. GIEK will underwrite up to 90 % of the total credit amount in connection with commercial risk and up to 100 % for political risk. GIEK will assess the borrower's repayment ability and may also offer advice and guidance on financing. Special securities or risk sharing with others may be required, particularly in connection with project financing.
Guarantees issued by GIEK are state guarantees. Banks are not required to make provisions in connection with loans guaranteed by GIEK. Thus the supplier's credit guarantee gives not only greater security and less risk, but also cheaper funding.
