State-backed export credit guarantees (Hermes guarantees) are a key instrument of the German government's foreign trade promotion program. They protect exporters against economic or politically motivated payment defaults and, in many cases, make the necessary sales financing for a transaction possible in the first place. The guarantee covers the entire value chain of an export transaction – from production and delivery to the final payment.

By assuming an export credit guarantee, the risk of payment default is largely transferred to the Federal Republic of Germany. For this, the policyholders pay a premium commensurate with the risk. In the event of a loss, the Federal Government compensates the policyholder up to the amount of the covered claim (less any deductible).

Export credit guarantees play a central role in risk management and sales financing. In many cases, they are what makes financing a transaction through credit institutions possible in the first place. With the German government and its excellent credit rating (Germany's AAA rating) behind it, the credit risk decreases. This has a positive effect on financing conditions.

The federal government's export credit guarantees are generally available to all export companies and export-financing banks based in Germany – regardless of the size of the company or the order value.