Business secretary Vince Cable says the schemes, which will be available through the Export Credits Guarantee Department (ECDG), will help exporters access credit and the insurance which is vital when trading overseas. Small and medium-sized enterprises (SMEs) are the target of the state-backed finance and insurance initiatives.
Cable adds that the measures, which will be rolled out between March and April, will help grow the UK economy by increasing the number of businesses selling products and services abroad.
As part of the package, announced today, the ECDG will create the Export Enterprise Finance Guarantee scheme that will offer export finance of up to £1 million for SMEs with an annual turnover of less than £25 million.
The department will also launch the Export Working Capital Scheme, which will be made available for businesses not eligible for the Enterprise Finance Guarantee (EFG) scheme. It will offer export finance worth more than £1 million.
A third initiative, the Bond Support Scheme will see the government share the financial risk with lending banks on the issue of contract bonds for SMEs planning to export. Banks offering foreign exchange hedging contracts to SMEs will also be supported.
In addition, the ECGD will extend its existing short-term export insurance to cover a broader range of exporters, including SMEs, to help them win more international contracts.
Trade and investment minister Lord Green comments, ‘Our exporters are crucial to securing the recovery and we want to do everything we can to help them grow. This new support will help British exporters compete and win business overseas.’
CBI director-general John Cridland welcomed the government initiatives, but he adds they are ‘long overdue.’
Cridland continues, ‘Many of these new finance products are already on offer by most of the other G8 countries, so this scheme will bring the UK up to speed in competition terms. There’s a particular need to tackle export under-performance in smaller companies, so SMEs should be encouraged by these new trade finance products designed to help them break into foreign markets and grow their businesses.’