By Daniel Hunter
Leading North West accountancy firm Mitchell Charlesworth is urging firms to take advantage of funding schemes to help them ramp up sales by exporting overseas.
Partner Brian McCann urged firms to explore several schemes that could help them get vital finance.
“At present only one in five businesses export,” he said. “For the right firms huge opportunities exist to grow across the world particularly in countries beyond the EU. However, it is important to ensure you are accessing all the support and funding available.
"Many firms may be held back by a lack of experience overseas or confidence in whether the funding package is strong enough. Nevertheless there are several funding schemes available that can help and give that vital reassurance."
Mr McCann pointed to four schemes that the Government has launched.
1) Letter of Credit Guarantee Scheme. This was launched in late 2010. It helps protect exporters if foreign companies or banks default on payments. Where a UK bank has added its confirmation to a letter of credit issued by an overseas bank, the Government guarantees to underwrite between 50 per cent and 90 per cent of the value of the letter of credit. However, the scheme can be used only by firms that are exporting to emerging markets.
2) The Bond Support Scheme was launched at the end of March last year and is designed to give exporters access to more funding and credit. Through the scheme the Exports Credit Guarantee Department shares the risk of providing bonds with the issuing bank by underwriting between 50 per cent and 80 per cent of the bond. This can increase the amount banks are prepared to lend to exporters. Firms pay a fee for the issue of the bond and the scheme is available only to firms exporting to countries in the European Union.
3) The Export Working Capital Scheme was launched in April last year. Its aim is to provide firms with working capital for specific contracts. If banks agree a funding facility for exporters based on a specific contract, the Government guarantees to underwrite up to 50 per cent of this. To qualify, the value of the contract must be at least £1million and the maximum loan that can be made against this is £750,000.
4) The export extension of the existing Enterprise Finance Guarantee scheme was launched in April 2011. This provides banks that lend to exporters a guarantee to underwrite up to 60 per cent of the loan facility. The extension is available for short-term loans of between three months and two years. It is available on loans of between £25,000 and £1million, but only to companies with a turnover of £25million or less.
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