UKEF launches enhanced loan guarantee scheme to attract more overseas buyers for UK exports

Thu 25 Feb 2021
Posted by: William Barns-Graham
Trade News

export finance

The government has announced an enhanced package of support for buyers of UK goods in a bid to boost the country’s exports.

UK Export Finance, the UK’s export credit agency, revealed details of its new Standard Buyer Loan Guarantee (SBLG) this week, which will provide financial support to overseas buyers at a time when they are struggling to access the capital they need to import UK goods and services. 

Payment upfront

Under the new product, UK exporters get paid upfront and their buyers benefit from flexible repayment terms.

The new programme will guarantee loans of up to 85% of a buyer’s contract value with a UK exporter, Trade Finance Global reports

Minister for Exports, Graham Stuart, said the programme would stimulate demand for UK trade and propel economic growth.

“The UK is one of the world’s top five exporting nations, supporting well paid jobs in every region and nation across the country,” he said.

“We are determined that this should continue, so this new scheme from our world-leading export finance agency, UKEF, will help our exporters reach buyers they would otherwise miss - and build back stronger from the pandemic”.

Alternative financiers

According to Global Trade Review report, the new programme responds to industry calls for alternative financiers to support SME exporters.

Previously, the SBLG’s predecessor facility was only available to financiers who had entered into an overarching master guarantee agreement with UKEF. This meant the support was only mainly used by traditional big banks such as HSBC, JP Morgan and Standard Chartered.

More funds

The new SBLG also increases the level of finance available to overseas companies buying from the UK from £5m to £30m.

The repayment period will usually be two to five years, although this can be increased depending on the sector and demand.

Down payment

A minimum of 15% of the contract value must be paid directly to the exporter by the buyer before the facility starts to be repaid.

Of the 15%, a down payment of at least 5% should be received upon contract signature.

NI firm benefits

Northern Irish company CDE Global is one of the first to access the scheme for a multi-million pound contract with a Tunisian customer to expand their production capabilities at a silica quarry. 

UKEF has offered to cover a nine-year facility to finance the contract for their buyer. Financing was arranged by AF Capital Partners, which is a new partner for UKEF as part of its initiative to support smaller deals.