Banks & UKEF partnering to increase SME lending & exports
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The new partnership between UK Export Finance and five of the major UK banks could mean increase SME lending – as Brexit talks begin in earnest, it couldn’t be better timed.
On Wednesday last week (12th July) Secretary of State for the Department for International Trade, Liam Fox announced a partnership between UK Export Finance (UKEF) and five major banks to help increase SME lending and support export trade expansion.
UKEF’s partnership with Barclays, HSBC, Lloyds Banking Group, RBS/Nat West and Santander will also enable them to provide support to supply chain companies of UK exporters. This makes it possible for smaller businesses to get government backed funds if they’re supplying bigger UK exporters.
Liam Fox said in a statement on the launch:
“As an international economic department, this new partnership shows the Department for International Trade’s commitment to help small businesses seize the global demand for British exports.”
“Providing easily accessible finance, backed by UKEF’s guarantee, will lift a common barrier to exporting. Providing that finance to suppliers as well as exporters means spreading the benefits of global trade, supporting more jobs and growth for companies large and small.”
Almost 300 businesses have benefited from the scheme since its launch in 2011. Now the offer has been broadened to include small businesses that work with larger UK exporters, it should further increase the amount of SME lending.
What’s new about the scheme
The new model enables banks to provide export-related trade finance, such as working capital loans and bonds required by overseas buyers, to support their SME customers directly.
The major change in the scheme is that UKEF will be able to give trade finance support to direct suppliers supporting UK exporters. The hope is that companies in manufacturers’ and service providers’ supply chains will gain access to contract bonds and working capital loans with the government’s guarantee.
SMEs will be in increasing need of funding in post-Brexit Britain, so this is timely news indeed as we saw the second stage of negotiations begin this week. David Davis, the Brexit secretary and Michel Barnier, the EU’s chief Brexit negotiator kicked off talks with a brief meeting in Brussels on Monday, but both parties are starting those discussions with views that are currently poles apart.
We’re yet to see what trade agreements are made as we head into round two of the negotiations. One can only hope those talks are as “constructive” as both have expressed a desire for them to be. But whatever the result of the talks SME lending needs to be expanded and more readily available in order to bolster a UK economy that relies heavily on the fortitude of small businesses and entrepreneurs.
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