More U.S. government money intended to counter China’s growing influence in the developing world means more opportunities for U.S. small and medium size companies. About $60 billion will now be available, much of it in loans.
President Trump signed the Better Utilization of Investments Leading to Development (BUILD) Act into law on October 5, 2018. This legislation will reform and strengthen U.S. development finance capabilities into a new federal agency to help address development challenges and foreign policy priorities of the U.S.
The U.S. International Development Finance Corporation (“USDFC”) will be a modern, consolidated agency that brings together the capabilities of OPIC and USAID’s Development Credit Authority, while introducing new and innovative financial products to better bring private capital to the developing world. That according to a press release from the news agency.
When the reimagined government agency gets back to business, it will provide the U.S. more flexibility to support investments in developing countries to “drive economic growth, create stability, and improve livelihoods.” In truth, the monies available are dwarfed by what China is spending and prepared to spend on high speed rail lines, dams, roads and other infrastructure. Still for those countries wanting to avoid the strings that come with China aid, USDFC is welcome news.
How does the program work?
OPIC can meet the long-term capital investment financing needs of any size business in a wide variety of industries such as information technology, health care, education, infrastructure, telecommunications, financial services, housing, and agribusiness. The majority of OPIC’s financing is used to cover the capital costs—such as design/engineering services, facility construction or leasehold improvements, and equipment—associated with the establishment or expansion of the foreign investment (the “project”).
OPIC can also work with financial institutions to fund the expansion of lending capacity—such as microfinance, small business lending or mortgage lending—in a foreign market.
OPIC does not consider financing requests that are solely for the purpose of making an acquisition, though limited acquisition costs may be financeable if additional capital will be expended to expand or rehabilitate the investment.
OPIC seeks to support early stage projects that demonstrate significant potential to achieve a positive social or environmental impact. These projects face obstacles to adequate financing in emerging markets because of their relative size and early stage of development. If you represent an innovative, earlier stage company with that is committed to a high level of social impact, please read more about OPIC support for your company through OPIC’s Portfolio for Impact Program (PI).
OPIC does not finance stand-alone export transactions. U.S. and even non-U.S. companies in need of trade finance should consider the Export-Import of the U.S. and the Small Business Administration. To learn more about other U.S. government programs that support exports, please visit www.export.gov.
OPIC is not right for every business interested in making investments in developing countries. For those considering, the application process is not a walk in the park. But this year there’s a lot more money available and there will be the usual competing pressures on the new agency of spreading the money around.
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