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There is little doubt that Britain has the innovation and creativity that is necessary to compete in a global economy. The high quality of UK small businesses is set to drive the economy forward. Despite the recent drop in UK exports, the widening trade gap can be closed if the government does more to rebalance the economy. Less dependence on local consumers and a more level playing field with international competitors can boost UK exports.

Manufactured products account for 85 per cent of UK exports. Products within this category include:

  • Chemical products
  • Computer, electronic and optical products
  • Basic metals
  • Transport equipment
  • Machinery and equipment
  • Refined petroleum products
  • Pharmaceutical products

The Office for National Statistics is responsible for export data in the United Kingdom. From August of 2013 to September of 2013, exports in the UK increased from 41482 GBP Million to 41743 GBP Million. However, a rise in imports left a £9.8 billion trade gap for September. Since 1955, the average of UK exports was 20403.2 GBP Million. The highest amount so far was in June of 2013 at 43276.0 GBP Million.
Export Opportunities

The country’s ability to secure sustainable economic growth will rely largely on how well it takes advantage of international trading opportunities as they come along. Recent statistics released by the Office of National Statistics is a timely reminder that more can be done with exports. While exports have an overall positive trend, the value of exports had fallen by £878 million through the second quarter of 2013. This is compared to previous quarters that showed better numbers. Apparently, the widening gap was due to the drop in the European Union exports while imports from the region rose.

UK exporters are doing well to look outside the EU for faster growing markets. Many believe there is more that the government can do to ensure global traders in the country are competing on a level playing field. Focusing on trade finance, insurance and promotion are essential tools that will help boost UK exports.

A key part to turning around the export situation is changing how medium-sized businesses are supported. More could be done that will enable MSBs to lead a global growth charge that puts the UK export business back on the international map. Despite representing a small number of firms, MSBs generate £22bn and employ 230,000 people, according to the Department for Business, Innovation and Skills. They could realize more success with more opportunities to expand internationally.

While not all MSBs can invest abroad, most of them believe that exporting to new markets is central to their growth strategy. It is projected that an extra £20 billion could be injected into the British economy if MSBs are given the opportunity to reach their full potential.

The significant opportunities that MSBs have to expand overseas goes beyond the traditional concept of exporting and selling abroad. Their business model can become globalised by reaching customers in new major markets.
Hurdles to Exporting

In a report by the Confederation of British Industry, the hurdles to exporting and how to overcome them were examined. CBI notes that businesses with export potential should work to build their knowledge in doing business abroad. It helps to develop international networks and connect with local partners in the country where MSBs want to export.

Government agencies can also help these businesses through on-the-ground knowledge of how to overcome any hurdles. Knowing the local culture and regulations that will determine which products are acceptable is important to building practical knowledge.

Thinking and acting like an international business will help put MSBs on the road to success. This will require making investments in the markets in which they operate. Doing more than just selling to these markets can give MSBs a heads up when the next opportunity presents itself. They are in a better position to make financial planning steps towards future growth in more markets.

Key to MSBs overcoming hurdles to scaling the global ladder is collaboration with firms that have more experience in the international markets. Larger businesses should share their experience and knowledge with MSBs. This can be done in many different ways, including their supply chain, trade associations or industry clusters.

Even with all the talk about exports and expansion, a majority of businesses in the UK are unaware of the schemes that could help them expand into exporting. Nearly 69 per cent of small and medium-sized enterprises are unaware of the UK Trade & Investment, which helps businesses become successful in international markets. Another agency, UK Export Finance, is also unknown to some MSBs looking to expand. UKEF provides finance and insurance solutions for UK businesses that export products and services.
Financing Solutions for Export Businesses

UK Export Finance is a government department for exporters who need finance and insurance solutions. Services offered by UKEF can help with cash flow problems and protect exporters from not being paid. Exporters can also receive help with fulfilling export contracts.

Established early in the 20th century as the first export credit agency in the world, UKEF facilitates export transactions that might not have been possible without the agency’s support. The wide range of schemes offered through UKEF gives SME and mid-sized exporters access to insurance and/or financing solutions as needed.

Working Capital

UKEF can offer a guarantee of 50 per cent a working capital value that is linked to an export contract. Depending on the detailed assessment of the contract, this amount could increase to 80 per cent. With this level of guarantee, exporters can access financing when it is needed most.

Contract Bonds

Raising contract bonds is similar to accessing working capital. UKEF can offer up to 80 per cent of the value of contract bonds that are issued on behalf of the exporter. The available bonding facility is increased in size.
Protection Against Calling on a Bond

Along with supporting exporters in raising contract bonds, UKEF can also protect against loss from unfair calling of certain bonds. This includes the fair calling of a bond that is the result of political events.
Direct Lending Scheme

Through the Direct Lending Scheme offered by UKEF, exporters can apply for support up to £50 million to finance capital and semi-capital goods. Buyers who may qualify for this type of financing have been unsuccessful at obtaining a credit loan from banks for export purchases. This opens up access for more foreign buyers to buy from UK exporters.

Under the scheme, an overseas buyer or borrower can receive an export credit loan from UKEF. The agency negotiates the terms and conditions of the loan and disburses funds against the manufacture and supply of goods and services. These terms are usually based on the respective export contract. UKEF also manages repayment of the loan.

Export Working Capital Scheme

UK exporters gain access to pre and post-shipment working capital finance through this scheme. Banks receive partial guarantees under the Export Working Capital Scheme that will cover credit risks commonly associated with working capital facilities for exports. Usually, exporters who are unable to obtain a loan from a bank will find this scheme most useful.

UK exporters may find this particular scheme useful after winning an overseas contract that is higher in value than typical amounts. Winning multiple overseas contracts may also qualify for up to an 80 per cent guarantee. Applying for the scheme is accessible through banks that participate in the scheme.

The principal benefit of the scheme for a UK exporter is having the ability to obtain working capital finance as needed from its bank. With this financial support, an export transaction can move forward even if the bank does not choose to fund the full facility amount of the transaction.

Another benefit is that the bank is protected, to the extent of the guarantee, against the UK exporter failing to repay the loan that is due. This includes the working capital facility upon expiry, cancellation or termination of the contract.

To be eligible for the Export Working Capital Scheme, an exporter must be carrying on business in the UK. There must also be a contract between a buyer outside the UK and the exporter that supplies goods and/or services to the buyer. Any advance given under the facility should be used for payment or reimbursement of expenses that the exporter incurs while performing the export contract.


These schemes are welcome supports for exporters in the UK. Modest assistance is better than no assistance for an economy that continues to be characterised by an imbalance of overseas and domestic demand. The UK government must continue to work closely with exporters to leverage the expertise offered by the UK Trade & Investment Department and the financial support from UKEF.

While there are no guarantees of success, there are plenty of opportunities for ambitious MSBs who want to expand internationally. They can learn what is required to become a global business and bring more trade opportunities to Britain’s economy. Stepping up to the challenge can help these businesses prosper in new markets all over the world.