UK Export Finance launches new guarantee scheme for SMEs

UK Export Finance (UKEF), the UK’s export credit agency and a government department, has launched a new guarantee scheme that will free up funds for UK businesses to cover the costs of international trade.

Exporters will be able to apply for finance from the UK’s five largest banks backed by a UKEF guarantee to free up working capital that can be used for everyday costs linked to exports and to scale up their business operations. The government says this will help thousands of businesses, particularly SMEs, to fulfil multiple export contracts, pay for labour costs, build their inventory and ease cash flow constraints.

Minister for Exports, Graham Stuart, said: "UKEF’s support for smaller businesses is shifting up a gear. The new General Export Facility will make a huge difference for entrepreneurs who need the financial backing to go global and benefit from our free trade agreements. It will help us bring genuine optimism back to exporters."

He added: "We were the only top ten exporting nation to grow exports last year. I’m determined for that success to continue as we recover from Covid-19. By transforming access to the world’s best export credit agency, we can unlock the entrepreneurial energy needed to make that a reality."

Financial support can be directly accessed from HSBC, Lloyds Bank, Natwest, Santander and Barclays, the major providers of trade finance in the country, which can put in place UKEF’s guarantee automatically.

Other lenders will be added to the facility in due course to ensure that it is available for as many businesses as possible.

Managing Director of  the trade association for the UK banking and financial services sector UK Finance, Stephen Pegge, said: "Supporting British exporters at this time is vital, which is why UK Finance and five of the main export lenders have been working closely with UKEF on the development of this new guarantee scheme.

"We expect business to apply from the new year as the General Export Facility enables lenders to support an even wider range of small and medium-sized firms, giving businesses the confidence to win new contracts by having an agreed revolving facility in place."

General Export Facility will support a range of trade finance products including trade loans, bonds, letter of credit lines, CapEx and invoice financing.

The facility enables UKEF to provide a partial guarantee to lenders of up to 80% of the credit risk on facilities typically worth up to £25 million, with UKEF’s support no longer tied to individual export contracts. This follows the recent launch of the Export Development Guarantee in July, a guarantee scheme that supports high value investment by major UK exporters.

UKEF has more than doubled the amount that HSBC, Lloyds Bank, Natwest, Santander and Barclays can automatically administer to an exporter through its facilities from £2 million to £5 million.