What is UKEF and how can it help businesses export?

What is UKEF and how can it help my business export overseas?

Learn about what UKEF is and the financial support it can offer your business as you start to export and expand internationally.

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UKEF stands for the United Kingdom Export Finance and is a government credit agency that aims to help businesses secure export opportunities. UKEF works alongside the UK’s Department for International Trade to help implement the UK’s export strategy, promoting the growth of small businesses and the wider UK economy.

UKEF liaises with more than 100 insurers and lenders in the private sector and helps small businesses enter the world of exporting by ensuring they win contracts, fulfil orders and get paid.

How can UKEF help my business?

Win contracts

UKEF takes a different approach when offering financial support to SMEs, unlike banks or shareholders. Instead of giving your business support directly (through a loan or grant like a bank would), UKEF takes a more indirect route, offering credit arrangements to overseas buyers. This type of lending ensures that overseas buyers have capital available to invest in UK businesses and improves the cash flow of domestic suppliers at the same time.

Depending on the specific financing agreement, UKEF can make loans to buy ranging from £25,000 to £8 billion and is willing to cover up to 85% of the total contract value. More information on the various financing options provided by UKEF can be found at gov.uk.

Fulfil orders

Winning contracts doesn’t mean your business is invulnerable. Even when contracts are signed and delivery dates are set, businesses can run into cash flow issues and may struggle to find the working capital to fulfil orders.

Here, UKEF helps SMEs with guarantee schemes via bonds with major UK banks or direct loans to help cover operational costs and initial asset purchases. UKEF helps cover as much as 80% of the principal sum and lends on average between £100 and £500 million to businesses. However, loan amounts are flexible with no minimum or maximum value specified.

Get paid

A further risk to your business can come from buyers defaulting on their obligations to pay, an incredibly tough situation to recover from, especially if you’re overleveraged or can’t resell your goods.

That’s why UKEF helps provide SMEs access to insurance schemes if the private market can’t offer coverage. The insurance policies available from UKEF protect against bond or counter-guarantee payment demands, export contract failure or investment losses and cover up to 100% of the cost depending on the policy.

Make the right decisions

UKEF has a network of staff across the UK providing consultations and advice on the UKEF products available and where UKEF can help SMEs take advantage of the export opportunities awaiting them. You can find your local UKEF contact on the UKEF website.

What are the requirements?

UKEF places requirements on access to their products. Across all of the products available, the business relationship must be with an overseas buyer investing in a UK domestic business (i.e. your business). As such, UKEF will not facilitate transactions for domestic business growth.

Similarly, UKEF requires that all transactions adhere to their foreign content policy, anti-bribery and corruption framework and show due diligence for environmental, social and human rights. Finally, transactions may not be supported if sanctions are imposed on the country of the buyer overseas.

How do I know if I’m eligible for support?

The eligibility criteria for each product varies slightly. In addition to the requirements mentioned immediately above, your business’s access to loans or guarantees will be subject to an application process and credit checks.

Crucially, UKEF operates to complement the private lending and insurance sectors, so it’s best to consult your existing options and see where UKEF can help bridge gaps to products or sums you’d prefer.

Do I have to pay UKEF back?

Not necessarily. For example, credit agreements provided to overseas buyers will remain for overseas buyers to repay. While your business may be the recipient of the funds in question, the loan liability remains with the buyer.

However, if you undertake a guarantee policy to receive loans for working capital, you’ll need to pay them back within the specified term length.

Attract international clients and pay suppliers easily

Operating in international currencies has two key advantages as small businesses are looking to expand. UKEF is able to provide loans to overseas buyers in a multitude of global currencies, meaning you could receive payment or deposits in an international currency and lose value from the exchange rate. Similarly, you’ll likely have suppliers of your own who are overseas and need to pay them, too.

WorldFirst has just the solution – a flexible account that can receive and pay funds seamlessly. Plus, it operates in more than 60 currencies, ensuring you can find a currency that both you and your buyer can work in, and even offers same-day payment options.

Join more than 240,000 businesses using WorldFirst for their transfer needs and attract international export opportunities with seamless transactions. Find out about your account options or call 0207 801 1068 today.

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Jason Kaye
Experience: 10 years writing within the e-commerce, finance and tech landscapes
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