What is GSM-102
GSM-102 is a credit guarantee mechanism rather than a direct loan or grant program. It provides assurance to U.S. financial institutions that a substantial portion of the credit risk on export sales will be mitigated through a USDA guarantee. This encourages private banks to finance transactions they might otherwise consider too risky.
The program is designed primarily to promote exports of U.S. agricultural goods to developing countries and emerging markets by making U.S. suppliers more competitive on payment terms.
What It Does
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Enables foreign buyers to purchase U.S. agricultural products on credit
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Provides a USDA-backed payment guarantee
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Reduces payment risk for U.S. exporters
How It Works
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Foreign buyer secures a letter of credit from an approved bank
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USDA guarantees a portion of the payment obligation
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Exporter ships goods and receives payment at shipment
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Buyer repays their bank over the agreed tenor
Why It Matters
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Improves exporter cash flow
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Expands access to new markets
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Strengthens competitiveness
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Supports scalable trade growth
What is FGP
The Facility Guarantee Program (FGP) provides credit guarantees for infrastructure improvements in countries where demand for U.S. agricultural products may be limited by lack of adequate facilities.
The program is designed to boost sales of U.S. agricultural products in countries where demand may be limited due to inadequate storage, processing, handling, or distribution capabilities. The program provides credit guarantees to facilitate the financing of manufactured goods and U.S. services to improve or establish agriculture-related facilities in emerging markets.
Under the FGP, the Commodity Credit Corporation (CCC) reduces the financial risk to lenders by guaranteeing payments due from approved foreign financial institutions to U.S. sellers or financial institutions.
The Facility Guarantee Program (FGP) was developed to expand U.S. agricultural commodity exports by providing payment guarantees to improve or establish agriculture-related facilities in emerging markets. By supporting such facilities, the FGP is designed to enhance the sale of U.S. agricultural commodities and products to emerging markets where the demand may be limited due to inadequate storage, processing, handling, or distribution capabilities.
FAS administers the FGP on behalf of the Commodity Credit Corporation (CCC). CCC guarantees payments due from approved foreign financial institutions to exporters or financial institutions in the United States. However, the financing must be obtained through normal commercial sources. Any follow-on credit arrangements between the foreign financial institution and the importer are negotiated separately and are not covered by the CCC guarantee. CCC will only consider issuing a guarantee if a transaction will primarily benefit U.S. agricultural commodity exports.
What It Does
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Enables foreign buyers to purchase U.S. agricultural products on credit
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Provides a USDA-backed payment guarantee
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Reduces the financial risk to lenders
How It Works
FGP covers credit terms of up to 10 years; maximum terms may vary by country and the details of the specific transaction for which coverage is requested. For transactions with tenor of 24 months or more, a minimum initial payment of 15 percent of the net contract value must be made by the buyer to the seller prior to the start of the credit. CCC may offer coverage of up to 100 percent of the net contract value less the initial payment. For short-term transactions with tenors less than 24 months, an initial payment is not required and maximum coverage is 98 percent. CCC’s coverage may include non-U.S. goods (including certain local costs) if the seller so requests and CCC determines that U.S. goods are not available or their use is not practicable.
The FGP is operated in a manner consistent with the requirements of the Organisation for Economic Cooperation and Development (OECD) Arrangement on Officially Supported Export Credits.