Access to export loans has been widened in an effort to boost export activities as the post-Brexit transition period nears its end.
UK Export Finance (UKEF) has confirmed the launch of the General Export Facility (GEF) that will provide lenders with security worth 80% of qualifying loans, up to a cap of £25m for each business.
With support from the country’s leading commercial lenders, the scheme provides loan guarantees to free up working capital and contribute to ongoing operating costs, as well as encouraging international trade, although loans will not be tied to specific export contracts.
The UK exported £691bn worth of goods and services last year, with almost half of these going to the EU; however, future exports to the EU will be subject to customs declarations and potential new tariffs from next year.
It is hoped this move will not only mitigate risk and increase lending appetite, but will also go some way to encourage businesses to export their goods following the transition period ending on 1 January 2021 by making it easier for small and medium-sized businesses to secure the funding they need as they recover from Covid-19 disruption and prepare for the country’s departure from the European Union.
Initially, businesses can apply for finance directly from five of the UK’s biggest banks – HSBC, NatWest, Santander, Lloyds Bank, and Barclays – with the 80% guarantee being put into place automatically. It is expected other lenders will be able to offer finance under the same terms in the near future.
Lending under the GEF can be taken by way of a traditional loan, as well as bonds, CapEx, and invoice finance arrangements. In order to be eligible for the scheme, a business must self-certify that a minimum of 5% of its turnover over the past three years – or 20% of any single year during this time – was generated from export sales.
BTG Advisory is a boutique practice providing commercial, strategic and partner-led advice, instructed by companies, investors, lenders and other stakeholders. As a trusted advisor to our clients, we are innovative and deliver solutions in a wide range of scenarios. BTG Advisory has expertise and specialist knowledge of raising finance, and long-term relationships with all of the UK’s biggest banks.
For further information on how BTG Advisory can assist, please contact one of our team.