UK Export Finance Vows Fivefold Rise in SME Support

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UK Export Finance, the government’s trade finance arm, has committed to a significant expansion in the number of businesses it supports by 2029, with a particular focus on small and medium-sized enterprises (SMEs), especially those led by women.

The export credit agency, which provides insurance cover on overseas contracts and guarantees on export-related loans, aims to bolster its support for SMEs to 1,000 per year, a fivefold increase from current levels.

Despite having the capacity for £60 billion of business, UK Export Finance only had £46 billion on its books last year. Tim Reid, the agency’s chief executive, has expressed a desire to boost this figure.

Over the past three years, an average of 170 SMEs annually received support, representing 81 per cent 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.

In its recently unveiled five-year business plan, UK Export Finance outlines strategies to ramp up support for SMEs. This includes providing more guarantees for working capital and trade finance, facilitating access to other business finance options, and assisting small companies in securing contracts on projects supported by UK Export Finance overseas.

Additionally, the agency plans to onboard more alternative small business lenders to its schemes and streamline decision-making processes for loan applications.

According to the agency’s projections, these initiatives should 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 notable development, UK Export Finance recently approved its inaugural support package for oil and gas decommissioning work, extending a $7.5 million loan guarantee to Brazilian firm Ocyan for equipment procurement from Scottish company Maritime Developments. This contract is expected to benefit over 70 Scottish firms in its supply chain.

The agency typically shoulders 80 per cent of the loan cost in case of borrower default, albeit at a fee. Criticism has been directed at the size of this fee in the past, with the British Exporters Association highlighting premiums ranging from 6 per cent to 7 per cent, higher than those charged by other countries’ export credit agencies.