The government will provide 80 per cent guarantees on loans and other financial support to help SMEs cover international trade costs.
A range of trade finance products will be included in the General Export Facility, such as trade loans, bonds, letter of credit lines and invoice financing up to the value of £25m.
This is hoped to encourage businesses to trade after Brexit and to take part in new free trade agreements.
Exporters will be able to apply for larger loans from the UK’s five main high street banks, backed by a partial state guarantee. The money can be used to cover costs linked to exports or to scale up business operations.
Financial support will be provided by HSBC, Lloyds Bank, NatWest, Santander and Barclays. They are the major providers of trade finance in the UK, though it’s hoped that other lenders will sign up to the scheme.
The aim of these loans is to help thousands of businesses who have multiple export contracts to pay for labour costs, build inventory and ease cash flow constraints.
The guarantee will be provided through UK Export Finance (UKEF), part of the Department for International Trade. The body has more than doubled the amount that banks can automatically administer to an exporter through its facilities – from £2m to £5m.
Graham Stuart, minister for exports, said: “The new [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.”
Stephen Pegge, the managing director of UK Finance, said: “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.”
Is my business eligible?
In order to qualify for GEF as a UK exporter, a business must:
- Self-certify that in any one of its last three financial years, at least 20 per cent of its annual turnover has been made up of UK export sales.
- In each of its last three financial years, at least 5 per cent of its annual turnover has come from UK export sales.