Yahoo Finance UK small businesses to get up to £25m in export finance
The UK government launched a scheme in partnership with banks including HSBC (HSBA.L) and Natwest (NWG.L) to provide small businesses with export finance support of up to £25m ($33m), in an effort to help them recover from the economic fallout of the coronavirus pandemic.
In what the UK Export Finance (UKEF), the UK’s export credit agency and a government department, called a “radical shake up”, the government will provide an 80% guarantee on financial support from lenders to support exporting costs, up to the value of £25m.
The General Export Facility “will help thousands of businesses, particularly SMEs, to fulfil multiple export contracts, pay for labour costs, build their inventory and ease cash flow constraints,” UKEF said in a statement.
Exporters will be able to apply for finance from the UK’s five largest banks — HSBC, Lloyds (LLOY.L), Natwest, Santander (SAN) and Barclays (BCS) — backed by a guarantee to free up working capital that can be used for everyday costs linked to exports and to scale up their business operations.
“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,” the minister for exports, Graham Stuart, is expected to say at a speech at UKEF’s ‘Trade and Export Finance Forum.’
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Financial support can be directly accessed from the five banks. UKEF said it has more than doubled the amount that the banks can automatically administer to an exporter through its facilities from £2m to £5m.
Other lenders will be added to the facility in due course to ensure that it is available for as many businesses as possible, it said.
In order to qualify, a business must prove 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 that at least 5% of its annual turnover has come from UK export sales.
Earlier this year, one in three SMEs and 43% of medium sized enterprises said they do not expect to be in business beyond a year.
Research by law firm Fladgate said its survey of 500 SMEs paints a “concerning outlook” for the backbone of the UK economy.
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