State offers loan support to foreign buyers of UK goods
Government-guaranteed loans will be offered to overseas buyers of British goods to help boost exports and support post-Brexit global trading.
UK Export Finance, the government’s export credit guarantee department, will on Tuesday launch a scheme to help importers of UK goods and services obtain the finance they need to buy British products.
Officials said that this would unlock trading opportunities for small British firms securing export contracts with overseas buyers.
Banks will be able to offer loans of up to £30m to companies buying from the UK with government guaranteeing repayment. UK exporters will get paid upfront when fulfilling a contract, while their buyers benefit from flexible repayment terms over a longer period.
Graham Stuart, minister for exports, said the government was determined that the UK would retain its position as one of the world’s top five exporting nations. He added that the scheme will help exporters “reach buyers they would otherwise miss — and build back stronger from the pandemic”.
Many small businesses have struggled with the immediate aftermath of the UK leaving the EU, including additional red tape and other costs for exporters to Europe.
Many small businesses are also struggling with cash flow given the impact of coronavirus on their businesses. The pandemic has hit global supply chains, with overseas buyers struggling to access capital needed to import goods and services.
The Standard Buyer Loan Guarantee (SBLG) provides a guarantee of up to 85 per cent of the value of a contract with a UK company. The new scheme is part of an overhaul to make UKEF’s supplier credit support more accessible.
UKEF is seeking to work with various new lenders to issue loans backed by SBLG, making the scheme more accessible.
Craig Beaumont, external affairs chief at the Federation of Small Businesses, said that the scheme would help UK businesses sell overseas and contribute to the “global Britain” push.
He added: “The key will be to make sure this works not just for medium-sized firms, but for small businesses too.”
The scheme has already been tested in a pilot. One of the first companies to take part was Northern Ireland’s CDE Global, which secured a multimillion pound contract with a Tunisian buyer to expand the production capabilities at a silica quarry in Oueslatia.
CDE’s chief executive Marc Jennings said this had been “a boost to our business, sustaining engineering manufacturing roles, and the access to finance ensures our customer can continue to invest in the best solution to help them grow”.
The financing was arranged by AF Capital Partners. Andrew Woolfson, partner at AF Capital, said the scheme had brought an export contract to the UK that would otherwise have been awarded to a German rival.