Are you one of many reviewing businesses reviewing their funding? The combination of rising interest rates and the impact of geopolitical and economic headwinds means that for many, securing medium term funding is an urgent priority. Have you considered all the available options?
Safety net to access millions
One option that you may not have previously considered is an Export Development Guarantee from UK Export Finance (an EDG). These are generally a minimum of £25 million but, on average, are around £100 - £500 million. You might think that an EDG is only available to UK businesses that are primarily focused on export or limited only to financing export sales. Think again. For many businesses who supply domestically and overseas, it is worth exploring with us whether an EDG may be available for your business.
Are you eligible?
There are a few availability criteria, but in terms of the key points, the exporter test requires both continuity of business in the UK and a minimum threshold of exports as a percentage of overall sales (whether goods or services). These are either:
- 20% of annual turnover in any one of the last three years;
- 5% of annual turnover each of the last three financial years.
You must also have premises and employees in the UK.
Future eligibility could still count
If you do not meet these thresholds, you may still qualify for an EDG if you are able to submit a business plan that demonstrates that within 3-5 years,10% of your turnover will be from UK exports, accompanied by a commitment to set up, operate from, and employ staff in the UK.
These wide criteria mean that many businesses will qualify for an EDG.
Access through your bank
Whilst UKEF will not generally provide funding directly, the issuance of the EDG will mitigate a funder's risk, making their provision of facilities to you more attractive to them. For this reason, our recent experience is that funders have much more appetite to make available EDG backed facilities than other traditional debt facilities. Unlike many trade finance products, the scheme does not have to be specific to a particular transaction. It will usually be issued in relation to liabilities in sterling, although UKEF will consider other currencies too.
Interested in learning how an EDG can help your business? Get in touch.