International Trade Secretary Liam Fox has announced that small businesses can now access government-backed export finance directly from their banks, boosting UK trade.
UK Export Finance (UKEF), the UK’s export credit agency, is on Monday 16 October launching a new partnership with 5 major high street banks allowing smaller businesses to access millions of pounds in government-backed trade finance directly from their bank in seconds.
UKEF, as part of the Department for International Trade, provides financial support to help UK companies sell to international customers. This new partnership with Barclays, HSBC, Lloyds, RBS/NatWest and Santander, announced by Liam Fox in July, comes as the Board of Trade met for the first time last week (12 October).
For the first time companies which supply exporters can now access UKEF-backed finance, helping them become part of major export contracts and spreading the benefits of trade to small and medium-sized enterprises (SMEs) across the UK.
Secretary of State for International Trade, Liam Fox, said:
Small businesses are the backbone of our economy, and giving them the support they need to seize international trading opportunities is a priority for the Department for International Trade as an international economic department.
That’s why we’re partnering with the five major high street banks to make government-backed finance from UK Export Finance readily available in a matter of seconds, opening up new global contracts to businesses across the UK.
UKEF provides guarantees to banks to help businesses access bank finance, even where they’ve reached their credit limit or where the deal is considered too risky for the banks to take on alone – opening up emerging global markets to UK suppliers.
With this new partnership for finance up to £2 million, SMEs can access UKEF support directly from their bank quickly and efficiently, without the need to apply separately. Provided a transaction meets UKEF’s criteria, the bank will just notify UKEF through a new secure digital platform. This means that, where previously it could take weeks in addition to the banks’ own turnaround times to access this support, it will now take a matter of seconds where the transaction is eligible.
As a result, the UK’s SMEs can quickly and easily access the funds they need to increase their exports, grow their revenue and sell British products around the world just by speaking to their bank manager.
At the same time, companies that aren’t yet selling overseas but are supplying products directly to those who are will also now qualify for UKEF support. Supplying to an exporter is a great way for smaller companies to get products into new markets, and government-backed finance can help secure contracts with big UK exporters to benefit from worldwide demand for UK goods and services.
Mike Cherry, National Chairman at the Federation of Small Businesses (FSB), said:
Through our work with the Secretary of State for International Trade, I am delighted to see the Government’s plans to improve access to export finance.
The success of the UK economy rests on helping more small businesses to export, and export more. FSB research shows 20 per cent of UK small firms already export, and with the right support this could double.
Today’s announcement of faster and more readily available finance means more small businesses will be able to access growth markets around the world.
Small firms’ contribution to the UK’s export market is of course not limited to those that sell products overseas. Our research highlights that one in six of all UK small businesses also form part of a supply chain of which the end product is exported, so opening up export finance to this group of firms is great news.
Businesses interested can find out more by speaking to their bank.
UKEF Case Studies
Darlington based pharmaceutical company Chemian Technology saw demand for its natural insect repellent rapidly increase following the Zika virus outbreak in 2016.
UKEF provided a loan guarantee for the company, allowing them to access significantly higher levels of funding. As a result, the company had the financial resources to grow its overseas business activities, including securing a £500,000 contract with an Italian buyer.
Specialist engineering company, Fast Technologies, recently secured a £1.4 million contract exporting to the Republic of Ireland – a huge opportunity for a company with a turnover of £1.1 million.
UKEF helped to secure a £750,000 capital loan for Fast, meaning that they had access to the money needed to fulfil the order. The contract led to the Derry based business taking on more staff before securing an additional £1.4 million deal with the same customer.
MR Solutions is a Queen’s Award-winning SME at the cutting-edge of MRI research based in Guildford. Due to its reputation for high quality and innovation, there is a high international demand for its products among academic and medical institutions. But complexity and high specifications of its products, they take time to manufacture, meaning that there can be long periods between winning and completing a contract – and therefore getting paid.
UKEF provided an 80% guarantee on a £598,000 working capital loan, allowing it to secure and finance a high-value contract with Sydney University that it may otherwise have had to turn down, resulting in a successful deal worth in excess of over £1 million.
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