New scheme launched to improve UK exporters’ access to trade finance

26/01/2021

A new scheme has been launched to increase the availability of trade finance facilities for UK exporters and help ease the cash flow challenges of exporting.

By providing lenders with a partial guarantee on trade finance facilities, the UK Export Finance (UKEF) General Export Facility scheme, which was launched in December 2020, is hoped to support the flow of vital funding to British exporters and allow them to access the working capital needed to trade overseas.

The scheme aims to help thousands of businesses, particularly SMEs, to fulfil multiple export contracts, pay for labour costs, build their inventory and ease cash flow constraints.

What is the General Export Facility?

The General Export Facility provides partial guarantees to banks to help UK exporters to gain access to trade finance facilities, without the need for an export contract.

It was developed in partnership with the banking and finance industry to support a range of trade finance products including trade loans, bonds, letters of credit and invoice finance.

How does it work?

Exporters will be able to apply for finance from participating lenders backed by a UKEF guarantee to access working capital that can be used for everyday costs associated with exporting activities and to help scale up their business operations.

Under the General Export Facility, UKEF can provide guarantees of up to 80% of the credit risk on facilities valued up to around £25 million.

The scheme can support cash facilities such as trade loans and contingent obligation facilities such as bonding and letter of credit lines, with maximum repayment terms of up to 5 years.

Am I eligible?

To qualify for the General Export Facility as a UK exporter, your business must:

1. Self-certify that in any one of its last three financial years, at least 20% of its annual turnover has been made up of UK export sales; or
2. In each of its last three financial years, at least 5% of its annual turnover has come from UK export sales.

Additionally, the exporter must be able to declare:

• They have premises in the UK
• They have employees in the UK
• They pay UK or Isle of Man/Channel Islands National Insurance Contributions or Corporation Tax
• They manufacture goods, deliver services or produce intangibles from the UK, which would (if required) qualify for a UK Chambers of Commerce Certificate of Origin

And/or:

• They do not solely engage in the supply of goods that have been manufactured outside of the UK or services where the person contracted to perform the services ordinarily carries on business outside the UK

Whether you meet this criteria or not, if you are looking to enhance your access to working capital, call us on 0800 9774833 or request a call back to explore your options.

What are the benefits?

Improved cash flow

Access to a trade finance facility could help keep cash flowing when exporting from the UK by advancing payment before your customers pay.

More flexibility

Having available cash to be in a position to  negotiate more flexible payment terms is always advantageous.

Greater certainty

UKEF’s support and most trade facilities are not tied to individual export contracts, so UK exporters can focus on their overall growth without worrying as to whether an export opportunity will be deemed supportable or not.

Improved accessibility

UKEF’s guarantee will be automatically granted to the participating lender, which may enhance the likelihood of a decision in your favour.

How to access export finance

If your business would benefit from a suitable finance facility to assist with the challenges of exporting, we’d love to help.

As the UK’s leading commercial finance broker with specialist knowledge of international and trade finance solutions, Hilton-Baird Financial Solutions will identify the most suitable finance facilities for your specific requirements.

Call us on 0800 9774833 or request a call back to talk to one of our cash flow experts.