UK Export Finance Plans to Expand Support for Small Businesses
The UK government's trade finance arm, UK Export Finance, has announced plans to significantly increase the number of businesses it supports by 2029. This expansion will focus on small and medium-sized enterprises (SMEs), particularly those led by women.
Currently, UK Export Finance provides insurance cover on overseas contracts and guarantees on export-related loans. The agency aims to increase its support for SMEs to 1,000 per year, a fivefold increase from current levels. This will help more small businesses access the finance they need to export their goods and services.
Despite having the capacity for £60 billion of business, UK Export Finance only had £46 billion on its books last year. The agency's chief executive, Tim Reid, has expressed a desire to boost this figure.
Over the past three years, an average of 170 SMEs annually received support, representing 81% of the agency's clientele. However, a significant portion of its guarantees has been directed towards large infrastructure, energy, and aviation contracts led by industry giants like Rolls-Royce and BAE Systems.
Provide more guarantees for working capital and trade finance.
Facilitate access to other business finance options.
Assist small companies in securing contracts on projects supported by UK Export Finance overseas.
Onboard more alternative small business lenders to its schemes.
Streamline decision-making processes for loan applications.
These initiatives are projected to result in UK companies securing £12.5 billion in export contracts and receiving £10 billion in "clean growth" financing over the next five years.
In a recent development, UK Export Finance approved its first support package for oil and gas decommissioning work. This $7.5 million loan guarantee to Brazilian firm Ocyan for equipment procurement from Scottish company Maritime Developments is expected to benefit over 70 Scottish firms in its supply chain.
The agency typically shoulders 80% of the loan cost in case of borrower default, albeit at a fee. Criticism has been directed at the size of this fee, with the British Exporters Association highlighting premiums ranging from 6% to 7%, higher than those charged by other countries' export credit agencies.