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UK export financing promises a fivefold increase in support for SMEs

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In light of ongoing job instability, recent UK data indicates a significant inclination among 16-26 year olds towards freelance, self-employed, or side hustle careers over traditional full-time employment.

UK Export Finance, the government’s trade finance arm, has committed to significantly expanding 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 foreign contracts and guarantees on export-related loans, wants to increase its support to SMEs to 1,000 a year, a fivefold increase from current levels.

Despite having a capacity of £60 billion, UK Export Finance had just £46 billion on its books last year. Tim Reid, the agency’s CEO, has expressed a desire to increase this figure.

Over the past three years, an average of 170 SMEs have received support annually, representing 81 percent of the agency’s client base. However, a significant portion of the guarantees are focused on major infrastructure, energy and aviation contracts led by industry giants such as Rolls-Royce and BAE Systems.

In its recently unveiled five-year business plan, UK Export Finance outlines strategies to boost support for SMEs. This includes providing greater working capital and trade finance guarantees, facilitating access to other business financing options and helping small businesses secure contracts for projects supported by UK Export Finance abroad.

In addition, the agency plans to bring more alternative small business lenders into its schemes and streamline the decision-making processes for loan applications.

According to the agency’s forecasts, these initiatives should result in UK companies securing £12.5 billion in export contracts and receiving £10 billion in “clean growth” funding over the next five years.

In a notable development, UK Export Finance recently approved its first oil and gas decommissioning support package, providing a $7.5 million loan guarantee to Brazilian firm Ocyan to purchase equipment from Scottish company Maritime Developments. This contract is expected to benefit more than 70 Scottish companies across the supply chain.

The agency typically covers 80 percent of the loan costs if the borrower defaults, albeit for a fee. The size of this fee has been criticized in the past, with the British Exporters Association highlighting premiums ranging from 6 to 7 percent, higher than those charged by other countries’ export credit agencies.