Quick guide to Buyer credit facility
This page is about UK Export Finance’s buyer credit facility and explains what a buyer credit is, how it works, its benefits, its key features and how to apply for the facility.
What is a buyer credit?
Under a buyer credit facility we provide a guarantee to a bank that makes a loan to an overseas buyer to finance the purchase of capital goods and/or services, worth at least £5 million from an exporter carrying on business in the UK. Loans can be made in the main trading currencies (including sterling, US dollars and euro) as well as some local currencies.
What are the benefits of buyer credit?
The benefits are:
- the exporter is paid as though it has a cash contract;
- the buyer or borrower has time to pay over a number of years and can borrow at fixed or floating rates;
- the lending bank receives a guarantee from us for full repayment of the loan plus interest.
- Risks covered
- The lending bank is protected against non-payment, for whatever reasons, of the instalments of principal and interest due under the guaranteed loan.
- The following criteria must be met:
- the exporter must be carrying on business in the UK;
- the export contract must have a value of at least £5 million or the equivalent in foreign currency;
- the bank making the loan must be acceptable to us.
The maximum amount that can be made available under the loan is 85 per cent of the contract value. A minimum of 15 per cent of the contract value must be paid directly to the exporter by the buyer before the loan starts to be repaid.
We can consider support for foreign content (that is, the cost to the exporter of purchasing goods or services from sub-contractors outside the UK) of up to 80 per cent of the export contract’s value.
The period for repayment of the loan must be at least two years.
There is no fee for the application. The premium payable for our cover is determined on a case by case basis.
How to apply
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The information available in this article is not intended to be a comprehensive description of our overseas investment insurance and many details which are relevant to particular circumstances may have been omitted. Investors must read the policy to see whether it meets their needs.
When considering applications, underwriters will look at each case on its merits