Updates on UK Export Finance

UK exporters will receive additional financial support from the government to encourage post-Brexit trade and take advantage of the new free trade agreements.

On Monday, ministers will announce a reshuffle in government support for export financing for small businesses.

Exporters will be able to apply for larger loans from the UK’s five big banks, backed by a partial state guarantee. This can be used to cover costs related to exports but also to increase business operations.

The end of the Brexit transition period on December 31 will usher in a slew of new customs procedures and costs for businesses exporting to the EU, whether or not the UK and the EU enter into a trade deal.

Officials hope the government-guaranteed loans will help thousands of businesses with multiple export contracts, pay for labor costs, build up inventory and ease cash flow constraints.

Thanks to his UK Export Finance (UKEF) branch – which is part of the Department of International Trade – the government will provide an 80 percent guarantee on lenders’ money to support general export costs.

Banks often have limited ability to lend to companies seeking export finance and tend to offer financial support only to cover individual contracts.

Graham Stuart, Minister for Exports, said the government was changing its support for internationally oriented businesses to help provide new business opportunities for businesses in the UK.

“New [facility] will make a huge difference for entrepreneurs who need financial support to go global and benefit from our free trade agreements. This will help us restore real optimism to exporters.

The new facility will support a range of commercial finance products, including commercial loans, bonds, lines of letters of credit and bill financing. The guarantee covers installations up to £ 25million, with UKEF support no longer tied to individual export contracts.

UKEF has more than doubled the amount banks can automatically administer to an exporter through its facilities from £ 2m to £ 5m.

Established in 1919, UKEF aims to ensure that no viable UK export fails for lack of private market funding to win, fulfill and get paid for contracts.

Mr Stuart said the UK was “the only top ten exporting country to increase exports last year. . . I am determined that this success will continue as we recover from Covid-19. “

Financial support will be provided by HSBC, Lloyds Bank, NatWest, Santander and Barclays, the main providers of trade finance in the country, although it is hoped that other lenders will join the program.

Stephen Pegge, Managing Director of UK Finance, which represents the banking industry, said: “Supporting UK exporters at this time is vital, which is why UK Finance and five of the major export lenders have been working closely with UKEF on the development of this new guarantee scheme.

Mr Pegge said it would give “companies the confidence to win new contracts by setting up an agreed revolving facility”.

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