UK Export Finance
UKEF helps your overseas clients who wish to purchase goods or services from you as a UK exporter, by offering their bank a 100% re-payment guarantee on the loan for your services. The loan guarantee from UKEF enables the bank to offer a competitive interest rate to the museum. For example:
A foreign museum has seen your company’s portfolio and would like to use your design/build services to re-vamp one of their galleries, but are having trouble securing a loan from their bank for the project. UKEF will guarantee the loan agreement between the museum and your bank thus making it easier for the museum to secure the loan to pay for your services and undertake the project. In addition, the greater the UK involvement in the project, the more readily the loan can be secured. So by introducing the museum to other UK companies in your supply chain, say for gallery lighting, security, access, even audience development consultancy, and creating a UK consortium around the project, the easier it is for the museum and your bank to receive UKEF support.
Of course, there are terms and conditions.
• The loan agreement between the museum and their bank should be re-payable over between 2 and 10 years.
• The lending bank must be acceptable to UKEF.
• You must be a UK corporate entity but your shareholder nationality is not a factor.
• The project must have an absolute minimum of 20% UK supply content.
• There may be up to 30% local (overseas) costs within your contract with the museum, meaning some supplies may be sourced locally to reduce the cost of the project.
• The client can be a private company or a government body such as a Ministry for Culture. The higher the status of the body and the support it receives from a Ministry of Finance, the greater the appetite of UKEF for the project and consequently the more favourable the agreement terms.
• Terms of the guarantee are set by OECD (The Organisation for Economic Co-operation and Development), including the loan premium (fee), interest rates and re-payment terms.
• The premium can be paid up-front or in instalments and 85% of the premium can be incorporated into the loan.
• UKEF ideally prefer arrangements to be made pre-contract, but cover is also possible where the UK exporter is already supplying contracted services.
• UKEF requires due diligence on environmental standards of the overall project, evidence of payments and, to comply with bribery and corruption checks, declaration of all exports, contracts, agent and company rep activities.
• The client is required to enter into a formal agreement with UKEF.
• The loan may be up to a maximum of 85% of the contract value.
Prior to a final agreement UKEF can provide an in-principle letter of interest, sets out the main terms and conditions on a case-by-case basis and may provide indicative premium rates.
Additional support offered by UKEF to UK suppliers includes:
• An Export Insurance Policy (EXIP) covering up to 95% of the exporters costs in case of buyer insolvency, political 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. The policy is available where the exporter has been unable to obtain commercially available credit insurance.
• Partial bank guarantees to cover export working capital. This is particularly useful if the UK exporter wins an overseas contract of higher than its typical project value, or wins more overseas contracts than it had previously done. This scheme can only be accessed through banks signed up to participate and should be discussed with the exporter’s bank first.
• Bond guarantees for contract bonds on UK export services of up to 80% of the bond value. This allows the UK exporter’s bank to increase its appetite for risk where the exporter is concerned. This scheme can only be accessed through banks signed up to participate and should be discussed with the exporter’s bank first.
For further information, please visit www.gov.uk/uk-export-finance.
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