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UK Export Finance

UK Export Finance

Bond Support Scheme:

Under the Bond Support Scheme UK Export Finance provides partial guarantees to banks in support of UK exports. Where a bank issues a contract bond (or indemnifies an overseas bank providing the bond) in respect of a UK export contract, we can typically guarantee up to 80% of the value of the bond. The guaranteed bank is protected against the failure of the exporter to reimburse it under its counter-indemnity if a bond is called and the bank is obliged to pay the beneficiary (buyer).

The scheme can only be accessed through banks that have signed up to participate in the scheme, the full list of which is shown here: https://www.gov.uk/bond-support-scheme-overview-and-how-to-apply

The benefits are:

  • The guaranteed bank is able to issue the bond, or indemnify an overseas bank providing the bond;
  • The bank receives a guarantee from us to cover the percentage of the amount due to it if the exporter fails to reimburse the bank following a call being made on the bond by the buyer;
  • The bank may, for the duration of our guarantee, be able to increase its risk appetite for the exporter;
  • UK Export Finances guarantee should significantly reduce the amount of cash collateral needed by the bank to underwrite the issuing of the bond/guarantee on the exporters behalf in turn this may enable the exporter to retain cash for working capital and/or contract fulfilment purposes.

The following criteria must be met:

  • The exporter must be carrying on business in the UK;
  • The bond must relate to a contract between the exporter and a buyer carrying on business outside the United Kingdom under which the exporter supplies goods and/or services to that buyer;
  • The export contract must have a minimum of 20% UK content.

There is no maximum value for each bond nor is there any maximum or minimum term for a guarantee.

The guaranteed bank pays UK Export Finance a guarantee fee, which is typically a proportion of the fee which the bank receives from the exporter for issuing (or indemnifying the issue of) the bond in question. UK Export Finance does not levy a fee to the UK exporter.


Export (Credit) Insurance (EXIP):

The Export Insurance Policy insures an exporter against the risk of not being paid under an export contract or of not being able to recover the costs of performing that contract because of certain events which prevent its performance or lead to its termination.

In carrying out the contract the exporter may incur costs before delivering goods and providing services to the buyer. For example, it may need to buy raw materials, manufacture parts or hire staff. The policy provides cover against the exporter not being able to recoup those costs because of the occurrence of an insured risk which leads to the contracts termination or prevents its performance.

As goods are delivered, the exporter may become entitled to payments under the terms of the contract. The policy provides cover to the exporter against non-payment of those amounts where the exporter has fulfilled its contractual obligations.

Benefits of an EXIP include:

  • Up to 95% cover is provided to the exporter;
  • The exporter is covered against loss suffered due to specified risks.

The following criteria must be met:

  • The exporter must be carrying on business in the UK;
  • The buyer must carry on business overseas;
  • If the duration of the contract is less than 2 years, UKEF is unable to offer cover if the buyer is in a country belonging to the European Union, or in certain other high income countries (Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland and the United States of America) - this restriction does not currently apply to Greece ;
  • The exporter must demonstrate an inability to obtain credit insurance from the commercial market;
  • The export contract must have a minimum of 20% UK content

Full details of the risks covered are set out in the policy but events which might cause a contract to be frustrated or the buyer to not meet its obligations include:

  • Insolvency of the buyer;
  • The buyers failure to pay any amount due under an export contract;
  • Political, economic or administrative events outside the UK that prevent payments from the buyer under the export contract being converted into sterling or transferred to the UK;
  • Hostilities or civil disturbances outside the UK that affect performance of an export contract.

Next steps:

For more information about the scheme, including a specimen policy, please see the following link to the relevant section of our website: https://www.gov.uk/export-insurance-policy


Export Working Capital Scheme:

The Export Working Capital Scheme (EWCS) assists UK exporters in gaining access to working capital finance (both pre and post-shipment) in respect of specific export contracts. Under the scheme, we provide partial guarantees to lenders to cover the credit risks associated with export working capital facilities. Where a lender provides such a facility in respect of a UK export contract, we can typically guarantee 80% of the risk.

The scheme is particularly useful in circumstances where a UK exporter wins an overseas contract that is higher in value than is typical for it or succeeds in winning more overseas contracts than it has done before. The lender is protected, to the extent of our guarantee, against the failure of the UK exporter to repay amounts due under the working capital facility upon its expiry, cancellation or termination.

Application for EWCS is made by the bank. The following link provides details of the scheme: https://www.gov.uk/export-working-capital-scheme-overview-and-how-to-apply including a list of participating UK banks.

The principal benefit for the UK exporter is that it is able to obtain the necessary working capital finance from its lender to support an export transaction in circumstances where its lender does not have sufficient risk appetite for the full facility amount.

The following criteria must be met:

  • The exporter must be carrying on business in the UK;
  • The facility must relate to a contract between the exporter and a buyer outside the United Kingdom under which the exporter supplies goods and/or services to that buyer;
  • Advances under the facility must be used to pay, or reimburse the exporter for payment of, expenses incurred in tendering for or performing that export contract;
  • The export contract must have a minimum of 20% UK content;
  • The maximum value of the working capital facility cannot be greater than 75% of the export contracts value;
  • The facility must have a maximum term of less than 2 years. There is no minimum term.

There is no minimum value for the EWCS facility.

The guaranteed lender pays us a guarantee fee which is typically a proportion of the interest margin received by the lender from the UK exporter for providing the working capital facility. UK Export Finance does not levy a fee to the UK exporter.