“Are banks interested in supporting small businesses to export?”
That was the question asked by one concerned SME owner at the UK Export Finance (UKEF) Annual Forum, held earlier this month (6 February) at InterContinental London – the O2.
The resounding answer from partners like Barclays and Lloyds was a ‘yes’, with banks keen to join forces with UKEF on products that can provide UK SMEs with the financing they need to sell overseas.
UKEF said that supporting small businesses was a cornerstone of its strategy – one of five objectives in its five-year plan, designed to drive UK economic growth. Chief executive Tim Reid said the agency is “working tirelessly” to deliver its plan:
“We’re doing more to support small businesses, we’re working hard to promote inclusive trade, we’re eager to have an even bigger impact in developing markets and support more clean energy projects.”
Across several panel sessions, workshops and meetings, organisations shared the support on offer for UK businesses, offering advice that would help firms overcome trade barriers and sell to new markets.
‘Taking away risk’
Panellists highlighted the fraught geopolitical environment that businesses are operating in.
Director general of the British Chamber of Commerce (BCC), Shevaun Haviland, shared that 40% of his members said they had felt the impact of geopolitical events such as shipping disruption and fallout from Trump’s trade tariffs.
One attendee shared their concerns about upcoming regulatory changes, such as the introduction of both the EU and UK’s Carbon Border Adjustment Mechanisms, which made them less inclined to commit to projects requiring export finance.
Adam Harris, UKEF’s head of civil infrastructure and energy, explained that removing the uncertainty surrounding external factors is exactly what the agency’s products are designed to do:
“We shift risk away... so it doesn’t hit your bottom line”.
Harris highlighted UKEF’s general facility and insurance products, designed to give businesses greater security when entering contracts in far flung markets.
Finding funding
It’s not just businesses feeling the pinch amid increasing geopolitical uncertainty, with banks also grappling with increased risk when lending.
One exporter asked whether banks are still committed to supporting exporters, citing high borrowing rates.
When it comes to finding a bank that is willing to supporting the financing of an export project, Roxanne Goodman, who created Female Founder Finance to support female entrepreneurs, advised businesses to shop around for the best rates:
“At any given time, there’s about 300 different bank and non-bank lenders out there, who might take an interest depending on what sector or industry you’re in”.
However, this doesn’t necessarily mean going to smaller providers that exporters are less familiar with.
One exporter asked whether “mainstream banks offer the opportunity to work with them on a standalone basis, just for UKEF facilities” or would they be required to change banks.
James Binns, managing director of trade and working capital at Barclays, confirmed the bank would be “very happy” to offer standalone export finance support to businesses who bank elsewhere.
‘Matchmaking’
A Stockport-based manufacturer said that financing had always been a known quantity – “getting somebody to lend you money has never been easy” – but that finding overseas customers had proven especially challenging.
He said that, although his company is “really keen” to export into African markets and the Middle East, “the biggest challenge for us is actually locating the in-territory customer”.
Joanna Mobed, UKEF’s deputy director of strategy, highlighted UKEF’s work to build a presence in key markets, like the Middle East. She said that the agency has built up a reserve of specialists who understand UKEF products and also “have their ear to the ground on opportunities available in those markets”.
Mobed encouraged UK suppliers to get in touch with UKEF and see whether opportunities are available in their sector.
Financial crime protection
The agency has also produced a new Financial Crime Compliance Guide to ensure that smaller businesses are contacting new prospects safely and without breaking laws on money laundering, sanctions, fraud, bribery and corruption. Such violations could limit their future access to export finance.
The guide includes information on carrying out appropriate due diligence when approaching new customers and suppliers overseas.
The guide is a response to report findings that show an estimated 140,000 small businesses in the UK had their accounts closed last year, with many banks citing financial crime compliance concerns as a leading reason for closure.
Export benefits
UK exports minister Gareth Thomas said that trading businesses “are more resilient” and that their employees “earn above average levels of income”.
He also noted that exports are a “key driver of future British growth”. This was emphasised by Reid, who listed export growth as the “number one priority” in UKEF’s five-year plan.
He also highlighted the advantages that exporting represents for the wider British economy and said that, by partnering with UK businesses, UKEF aims to unlock £17bn in sales opportunities.
Haviland also said exports “cannot be underestimated as a driver for growth”, adding that BCC estimates that by “increasing exports by two percentage points, it would add 0.7% to GDP… a huge increase”.
Learn more
To find out more about UKEF products and the role of export credit agencies in supporting international trade, you can upskill your team via the Chartered Institute of Export & International Trade’s suite of trade finance qualifications.
These range from a UKEF-specific qualification at Level 3, which covers the nuances of applying for different UKEF products, through to our upcoming Level 5 qualification: Certificate in International Trade Finance, which will take a closer look at managing risk, appropriate payment methods and international business challenges, such as anti-competitive practices and intellectual property rights.
We also have a Level 4 qualification: Award in Finance of International Trade, which covers three key areas:
- Finance for businesses trading internationally
- Managing financial and commercial risks
- Methods of payment and trade finance perspectives
Chartered Institute trade and customs consultant, Nicholas Blenkinsop, said that developing staff in this area “is not merely an investment in knowledge, but a strategic cornerstone for business growth”.
Staff that have a thorough understanding of trade finance add significant value to the business: “enhance[ing] operational efficiency, risk management and global market competitiveness”.
“Informed and skilled staff drive innovation and make more informed decisions when it comes to protecting the interests of your business.”
For more information about the Chartered Institute’s trade finance qualifications, including further information about our Level 3 and Level 5 qualifications, you can get in touch with Camille Lanckneus via email.
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