Export finance

Short-term loans and bonds to help UK businesses fulfil orders from customers overseas and receive payment.

Exporting goods comes with large upfront costs, which can put a strain on your business’ finances and working capital. Export finance eases that burden by taking on some of the risk of trading abroad.

This type of finance is designed to help UK businesses sell overseas. There are different products that can help you get paid and access short-term loans and bonds to be able to fulfil orders from other countries.

If you're looking to sell your product or service abroad, there are different types of export finance available to you.

Bond or guarantee

As part of the terms of the contract, many overseas customers will ask for your bank to issue a bond or guarantee in return for payment. This allows the customer to 'call' the bond from the bank if you don't fulfil your side of the deal.

These finance products can take the form of:

  • advance payment bonds
  • performance bonds
  • warranty bonds

Letter of credit

This guarantees that you'll receive payment on time, for the full amount agreed in the contract. If you're unable to make a payment in full or in part, the buyer's bank will cover any shortfall. This reduces the risk for you, as seller, and any potential finance providers.

Working capital loan

There are many providers in the UK that offer loans to help businesses fulfil overseas contracts and orders.

When securing a loan, you can borrow against assets, including invoices.

If you're finding it difficult to secure export finance because of the risks involved, you may be able to get a guarantee or insurance from a third party, reducing the lender's risk and making securing finance more possible.

When you apply for export finance, the provider will assess your business. Before they make a decision, they will look at things such as:

  • your credit history
  • your ability to repay
  • assets on your balance sheet
  • your finances

You can use export finance to:

  • diversify and increase sources of revenue for your business
  • grow your customer base internationally
  • make your international offer more competitive

Defaulting and your credit report

As with any loan, if you default on your repayments (in other words, fail to make them), you may have to pay charges. This might also affect your credit report.

Fees

There might be a charge for arranging letters of credit and bonds and guarantees. You need to be aware of the full cost of any services you require.

Business stage

Established, with assets and a trading history

Annual turnover

Any

Sectors

All

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Approaching your bank first is usually a good place to start when looking for export finance.

Your bank should know your business best, so it’s often helpful to approach them in the first instance to look at the options available.

If they’re unable to help, then other banks and lenders may also be worth looking into, particularly if they’re experienced when it comes to export finance.

If your bank or other lenders can’t support your business, then you may be eligible for government-backed finance or insurance from UK Export Finance.

If you’re uncertain about anything to do with export finance, you should seek independent advice.

UK Export Finance

UK Export Finance (UKEF) is the UK government's export credit agency. It can help you sell your product overseas, by providing export insurance and guarantees to lenders.

In overseas markets, it may be more difficult to get payment upfront for a product. This means if your business wants to trade abroad, you might need to put down significant security before you're approved for finance which can put pressure on your working capital.

UKEF’s trade finance products help to free up working capital to fulfil orders by providing guarantees to lenders through its Bond Support Scheme and Export Working Capital Scheme. It can also help businesses scale up their exports without the need of a specific export contract through its General Export Facility.

UKEF’s Export Insurance Policy can help exporters manage risks in challenging markets, ensuring that they get paid even where the private market is not able to offer insurance.

Other finance options

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Debt
A business secures finance against its existing assets; these can include invoices and also machinery, property and even intangible assets such as IP.

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Annual turnover Variable – dependant on asset values
Sectors Any
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Click here to visit Peer-to-Peer Lending
Debt
A business borrows money through an online platform and pays it back with interest over an agreed period.

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Get a loan quickly and maintain full control of your business.

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Click here to visit Direct Lending Fund
Debt
A business borrows money from a fund and repays it with interest. A fund may be able to provide loans where a bank will not.

Direct Lending Fund

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Businesses with assets to use as security against lending.

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Flexible and tailored loans and to maintain full control of your business.

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Business stage Established with assets and a trading history
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