The Direct Lending Scheme has been developed by UK Export Finance, the Government’s export credit agency. It will support exports where buyers need loans of up to £50 million to finance the purchase of capital and semi-capital goods and services from UK exporters, but have been unsuccessful in obtaining an export credit loan from the banks.
The new demand led lending scheme will mean more foreign buyers can access support to buy products from UK exporters.
The Chancellor announced the £1.5 billion Direct Lending Scheme in the Autumn Statement last year. This is the first time in UKEF’s history it will be able to offer this type of support.
Lord Green, Minister for Trade and Investment said:
Exports play a vital role in rebalancing our economy, and where the customers of British exporters are having difficulties securing export finance from other sources, UK Export Finance can now assist by providing loans through the Direct Lending Scheme.
Under the Scheme, UK Export Finance will provide an export credit loan directly to an overseas buyer or borrower. It will directly negotiate the terms and conditions of the loan, disburse funds against the manufacture and supply of the goods and services under the respective export contract and manage the repayment of the loan.
The Direct Lending Scheme is now open to applications. Read more about the scheme.
Notes for Editors
- UK Export Finance is the UK’s official Export Credit Agency. Its statutory role is to support exports. It does so by taking financial risks related to the non-payment of exports by overseas buyers/borrowers.
- For export contracts involving the supply of capital/semi-capital goods and services, overseas buyer often require financing repayable over 2 years and longer which can be provided by way of export credit loans. Traditionally, such loans are provided by commercial banks; UKEF provides guarantees to the banks for the repayment of loans.
- UK Export Finance will now provide loans directly to buyers/borrower where it has not been possible to obtain finance from a bank for a particular export transaction; exporters will still be expected to seek finance from the banks in the first instance as it is not the intention of the Direct Lending Scheme to displace the role of banks in providing export credit loans.
- The Direct Lending Scheme is being made available until March 2016. Funding of up to £1.5bn is being made available to support export loans between £5 million and £50 million.
- All direct loans will be repayable on fixed interest basis. The interest rate will be based upon OECD Commercial Interest Reference Rates (CIRRs) plus a margin or the cost of HMG funds, whichever is the higher. The interest rate will be set when drawings start to be made under an approved loan.
- The terms of the loans will conform with the OECD Arrangement which governs the basis upon which Export Credit Agencies support exports to help achieve a level playing field.
- The intention to launch a Direct Lending Scheme was announced by the Chancellor of the Exchequer in the 2012 Autumn Statement.
- All applications for the Direct Lending Scheme will be subject to the same assessment criteria as other UKEF products and services.
- In finanical year 2012 to 2013 UKEF provided £4.3 billion of support through its existing facilities to British firms.
- Business interested in the scheme can contact: Steve Carroll UK Export Finance 020 7271 8057.