German Export Credit Guarantees – Simplified procedures for Ukraine
German Export Credit Guarantees is a new opportunity for Ukrainian entrepreneurs to obtain the necessary equipment, and for German manufacturers to sell their goods.
Hermes сovers an export credit guarantee (ECG) by the German Federal Government. These guarantees are an important part of German foreign trade policy and protect German exporters and export finance banks from political and commercial risks. Euler Hermes Aktiengesellschaft has been commissioned by the Federal Government to manage the federal financing instruments Export Credit Guarantee and Imposed Loan Guarantee.
Euler Hermes Aktiengesellschaft offers short-term loans for the following goods:
German companies are ready to deliver goods to Ukraine worth more than 24 million euros in July and June. The special conditions offered by the German Government can predict that 100 million euros will be invested in business in Ukraine this year.
A representative of Geringhoff, an agricultural machinery manufacturer specialising in combine harvesters, noted that the Ukrainian market is very important to them. The agricultural production market is seasonal, making timely payments crucial. If they don't have Hermes cover, they will require advance payment. The company hopes that Hermes cover will allow them to increase the number of customers in Ukraine.
With this coverage, the client will pay for the goods to Geringhoff, and in the case of its bankruptcy, after 12 months, Hermes cover will compensate the Ukrainian company's debt to the manufacturer. The cost of Hermes cover for Ukrainian companies depends on many factors. It can be as low as 0.5% of turnover, and the German importer includes this amount in the product's price.
Regarding the minimum initial payment, there are no specific requirements for short-term contracts. It all depends on the exporters, but they must have a presence in Germany. Shipments from China are not covered by Hermes. Additionally, Hermes cover is not risk insurance in favor of Ukrainian companies, and military risks are not compensated. That is, if a Russian missile destroys equipment or something else, these costs cannot be covered. There are other programmes available, and their terms of cooperation with them can be found on their website. There is currently no maximum number of contracts for Hermes cover, but the details are carefully reviewed before signing contracts for cover.
For Ukrainian companies, the first step should be communication with German partners, and then communication with the office that provides cover.
The Senior Underwriting Manager of the Export Credit Agency (ECA) in Germany emphasized that coverage terms can range from 360 days to 15 years depending on the project size and the shelf life of the goods being supplied, and for some projects, such as renewable energy, even longer.
Benefits provided by project financing from the German ECA:
The maximum limit for project value is 250 million euros. If the project amount exceeds 10 million euros, a more detailed analysis of the project is conducted, all risks are clarified, and an audit is performed. If necessary, the issue of collateral or state guarantees is raised. Cover can also be combined with leasing of German equipment.