The General Export Facility recently launched by UK Export Finance aims to provide greater access and flexibility for UK exporters to trade finance funding.
UKEF is the UK’s export credit agency. It exists to ensure that no viable UK export lacks for finance or insurance from the private market, providing finance and insurance to help exporters win, fulfil and get paid for export contracts.
They provide support through partial guarantees to banks so they can provide UK exporters access to trade finance facilities.
Previously support was tied to individual export contracts, however this did not provide sufficient flexibility for exports and the General Export Facility (GEF) was developed to support a range of trade finance products to help more UK exporters to gain access to trade finance facilities.
The following facility types, with maximum repayment terms of up to 5 years can be supported:
- Cash facilities such as trade loans
- Contingent obligation facilities such as bonding and letter of credit lines
There are certain requirements to access the scheme that an exporter must be able to declare and are similar to the existing criteria set out for UKEF facilities.
The new scheme provides more flexibility as the UKEF guarantee helps UK exports negotiate more flexible trade finance facilities with participating banks, which in turn can provide more working capital to support growth.
It will provide greater certainty of eligibility as there is no need to evidence any individual export contracts, unlike other UKEF schemes. It will appeal to exporters who do not routinely enter into large, single export contracts.
Whilst the number of participating banks is small, the delegated authority to those banks has increased to £5m and will allow for reduced response times as long as the exporter meets the criteria set out under the scheme.
Currently only available through the five main UK Banks, however UKEF would like to expand the scheme by adding more approved lenders. Given the participating banks will only provide facilities to their own customers, this still hinders access to funding for many SMEs. For the scheme to be a success it will need more participants to give even greater access to export finance for businesses.
Greater access to trade facilities for exporters under this UKEF scheme can help with the impact of Brexit on cashflows.
UKEF have a team of Export Finance Managers across the country that can assist in determining eligibility for the scheme and we have worked with them in helping businesses accessing finance either under the scheme or with other funders.
Please contact us for further information and advice on how to manage your cashflow requirements.
by Diane Davies
Senior Commercial Manager at Snowball