Can I get funding for exporting goods from the UK?

If you are wanting to export goods from the UK, your business can get funding in a number of different ways with the help of export finance. Export finance, also known as trade finance, relates to the various schemes that allow exporters to move their goods internationally with far fewer issues. 

Examples of export finance are: 

  • Credit or guarantees that safeguard remuneration
  • Loans that allow you to carry on completing orders
  • Insurance to protect you if you don’t receive payment

To help you get a better idea of the different avenues you can explore when trying to get funding for exporting goods from the UK, the KlearNow team has put together an in-depth guide below.

Funding from your bank

If you are looking for financial support to help you with the exporting of goods, one of the best places to look initially is with your bank. One of the key benefits of approaching your bank first with these sorts of queries is that they know your operations intimately, meaning they are perfectly positioned to offer guidance surrounding finance avenues.

If you have spoken to your bank and found them to be unhelpful in this regard, then you can always try and look for a different one. It’s very important to remember that different banks have different specialties, so while some may have an impressive bank of knowledge on export finance, others might not.

If your bank can help you with export finance, then the next thing you need to do is start putting together a rigorous plan that demonstrates the security of your business, it’s position within the market and potential opportunities for growth. You will also need to include how you intend to pay the debt back in the future.

It’s also worth keeping in mind that your bank’s decision will ultimately hinge on the strength of your business’ credit history, so if you have had difficulty in this area, then the proposal must address this.

Government financial support

Firstly, for companies younger than 24 months, a startup loan is something to consider. A startup loan is a government-backed initiative that allows companies that meet the criteria to apply for a loan worth anywhere between £500 and £25,000.

A startup loan is an unsecured loan, meaning that whether you’re eligible or not will be down to your credit rating and none of your assets will be seized as collateral. Successful applicants will get up to 12 months of free mentoring too.

Exporting goods finance application criteria:
  • You must be living in the UK
  • You must be over the age of 18
  • You have (or at least have a plan in place to create) a UK-based business that has been trading for under 24 months.

If the above doesn’t apply to you and your bank hasn’t been of use, it’s worth checking whether you are eligible for other forms of government financial support, you could go down the insurance avenue with UK Export Finance (UKEF). As the UK’s export credit agency, it’s UKEF’s goal is to ensure that as many feasible exports as possible stay afloat with recourse to loans, insurance and other financial products.

On top of financial support, UKEF helps secure UK exports in other ways too, including:

  • Providing financial support to international buyers of British products and services
  • Offering insurance for less-developed countries outside of Europe and North America that pose more risk.
  • Ensuring that pre-agreed, globally-recognised standards are applied to all operations in order to minimise corruption and bribery.
  • Ensuring that social, environmental and anti-corruption policies are upheld. These are tracked closely by the Export Guarantees Advisory Council.

If you are interested in seeking help from UKEF on matters relating to export finance, you can contact them for free. If you enquire online, you will be asked to provide some information on your experience in exporting, as well where you currently work and the easiest methods of contact.

Internationalisation Fund

Another key form of government support for exporters would be the Internationalisation Fund, supported by the European Regional Development Fund. This fund, recently introduced by The Department for International Trade, essentially offers matched-funded grants that can be anywhere from £1,000 and £9,000, subject of course to the eligibility of the borrower and availability.

However, before digging further into this sort of loan, it’s worth keeping in mind that, to secure a grant, you will need to put some money towards the funding yourself. This will be either 40% or 50% of the overall amount, depending on where your company is located.

The fund can be used to support a wide variety of different operations. Here’s the criteria for eligibility:

  • Your firm must be UK based.
  • You must be an SME to qualify, meaning that your number of employees does not exceed 250.
  • On top of being an SME, it also has to be the case that no more than 25% of your company is owned by a larger corporation.
  • It has to be the case that your annual turnover is less than €50 million. Or, alternatively, your annual balance report cannot be over €43 million.

Interested in applying for a matched-funded grant from the Internationalisation Fund? All you have to do is contact your local DIT office, you can do that by following this link to Gov’s website

Finance platforms

If a bank or UKEF can’t help you in matters of export finance, you can always turn to a finance platform. In fact, the government requires that banks who cannot offer help with export finance refer companies to such platforms.

Finance platforms are essentially ways that businesses can match themselves up with appropriate financial products. Take Alternative Business Funding, for example. It’s free to use, all you have to do is enter the amount of money you require in pounds and the reason the funding is required. From there, just hit search and a variety of different funding avenues will be presented to you.

Peer-to-peer lending

While this might not be the most conventional way of looking for financial support for your export endeavours, peer-to-peer lending is something to consider if you are struggling for options.

Peer-to-peer lending is fundamentally lending between businesses, or more specifically, businesses that want to borrow and businesses that want to lend. The loan is normally composed of smaller sums from a number of different lenders and can be processed faster than the average bank loan, which is one of the key benefits of this sort of lending. In terms of interest rates, they will either be fixed, or the lender in question will have to submit a proposal for a loan including interest rates that they are willing to lend at.

If you are interested in peer-to-peer lending, here are some of the key advantages and disadvantages that you should be aware of, from the perspective of borrowers:

  • Advantage: peer-to-peer lending tends to be one of the more accessible forms of funding, particularly for businesses with credit ratings that are on the lower side.
  • Advantage: given the sheer amount of competition between business lenders, peer-to-peer loans tend to come with lower interest rates, making them seem attractive to many borrowers.
  • Disadvantage: unfortunately, some jurisdictions require companies to comply with strict investment rules, or just completely forbid this form of lending outright. This means that P2P lending simply might not be an option for some borrowers.

Equity options

If you’re an established company that’s planning to grow significantly, it’s likely that you would make a good candidate for private equity funding. This means that a company will invest in your business and finance it, for a percentage of equity stakes. However, the percentage you’re willing to offer them will depend on the type of partnership you wish to make. 

When an agreement has been made between your business and its investors for them to take a large chunk of the business, it’s typical that changes will be made to the business structure and processes.

  • The British Business Bankhas a Finance Hub to help businesses with their finances. This service not only helps when it comes to gaining a better understanding of the business finance options available to you but also helps you identify the financial source that’s right for your company. Once you’re happy with your financial source, they can also provide regional support and business guidance.

    The Finance Hub works alongside the government, financial providers and institutions to ensure that the business support they provide is relevant and covers all important areas of the finance market. 
  • UK Business Angels Associationare investors that typically invest their own money in startups and small companies, which means they’re happier to take risks. It is a not-for-profit organisation that offers connections, representation and brand awareness, as well as workshops and roundtables. 

Contact KlearNow 

Whether you’re an importer, customs broker, freight forwarder or carrier looking to save time and money, contact KlearNow and enjoy our on-demand transparent smart Logistics as a Service(LaaS) platform that simplifies the customs clearance and drayage processes. Our platform doesn’t come with any IT costs or integration fees which means it’s a simple flat fee that will keep hold of all of your business documents, track alerts and shipments in real-time, reduce errors with the integration of AI and provide you with important data whenever and wherever you require it.