The U.S. Department of Agriculture's Facility Guarantee Program (FGP) is
designed to expand sales of U.S. agricultural products to emerging markets where
inadequate storage, processing, or handling capacity limit trade potential. The
program provides payment guarantees to finance commercial exports of U.S.
manufactured goods and services that will be used to improve agriculture-related
Emerging markets often lack the infrastructure to support increased trade
volume. Export sales of U.S. equipment or expertise to improve ports, loading
and unloading capacity, refrigerated storage, warehouse and distribution
systems, and other related facilities may qualify for facility guarantees, as
long as these improvements are expected to increase opportunities for U.S.
Under this program, USDA's Commodity Credit Corporation (CCC) guarantees
payments due from approved foreign banks to exporters or financial institutions
in the United States. USDA's Foreign Agricultural Service (FAS) administers this
program on behalf of the CCC. The financing must be obtained through normal
commercial sources. Typically, a guarantee covers 95 percent of principal and a
portion of interest. FGP regulations are found in the Code of Federal
Regulations 7 CFR 1493.
The Secretary of Agriculture must determine
that the project will primarily promote the export of U.S. agricultural
commodities or products to emerging markets.
An emerging market is a country that the Secretary
of Agriculture determines: (1) is taking steps toward a market-oriented economy
through the food, agricultural, or rural business sectors; and (2) has the
potential to provide a viable and significant market for U.S. agricultural
Only U.S. goods and services are eligible under the
program. The CCC will consider projects only where the combined value of the
foreign components in U.S. goods and services approved by the CCC represents
less than 50 percent of the eligible sales transaction.
An initial payment representing at least 15
percent of the value of the sales transaction must be provided by the importer
to the exporter.
Payment terms may range from 1 to 10 years, with
semi-annual installments on principal and interest. The applicable program
announcement will specify actual payment terms.
Payment must be made to the exporter in U.S.
dollars on deferred payment terms under an irrevocable foreign bank letter of
The CCC determines the rate of coverage (currently 95
percent) that will apply to the value of the transaction, excluding the minimum
15-percent initial payment. The CCC also covers a portion of interest on a
variable rate basis. The CCC agrees to pay exporters or their assignee financial
institutions in the event a foreign bank fails to make payment pursuant to the
terms of the letter of credit. The FGP does not cover the risk of defaults on
credits or loans extended by foreign banks to importers or owners of facilities.
For more information, contact: Director,
Credit Programs Division, Office of Trade Programs, FAS/USDA, Stop 1035, 1400 Independence
Ave. SW, Washington, DC 20250-1034; tel.: (202) 720-6211; fax: (202) 720-2495.
Export credit guarantee program information, such as such as risk-based fee
schedules and country ratings, is available on the FAS Web site:
FGP information also can be found at:
FAS program announcements of FGP allocations are posted at:
General information about FAS programs, resources, and services can be found