Quick guide to Supplier credit financing facility

This page is about UK Export Finance’s supplier credit facility and it explains what it is, how it works, its benefits, its key features and how to apply for the facility.

What is a supplier credit?
Under a supplier credit financing facility, we provide a guarantee to a bank either:

  • for a loan to an overseas buyer to finance the purchase of capital goods and/or services, worth at least £25,000 from an exporter carrying on business in the UK – known as a supplier credit loan facility; or
  • to cover payments due under bills of exchange or promissory notes purchased by a bank from an exporter carrying on business in the UK, who has received them in payment for capital goods and/or services supplied to an overseas buyer worth at least £25,000 – known as a supplier credit bills and notes facility.
  • Finance can be made available in the main trading currencies (including sterling, US dollars and euro). Other currencies can be considered.

How does a supplier credit loan facility work?
Quick guide to Supplier credit financing facility

How does a supplier credit bills and notes facility work?
Quick guide to Supplier credit financing facility

What are the benefits of supplier credit financing?
The benefits are:

  • the exporter is paid as soon as the goods have been shipped and/or services performed;
  • the buyer or borrower has time to pay over a number of years and can borrow at fixed or floating rates;
  • the bank receives a guarantee from us for the amounts due under the bills of exchange, promissory notes or the loan.

Risks covered
The bank is protected against non-payment under the guaranteed bills of exchange, promissory notes or loan. However, the bank must take the documentation risk and will therefore need to ensure that the loan agreement and/or the bills or notes is/are legally enforceable.

Eligibility
The following criteria must be met:

  • the exporter must be carrying on business in the UK;
  • the export contract value must be at least £25,000 or the equivalent in foreign currency;
  • the bank must be acceptable to us.

Maximum amount
The maximum amount that can be made available under the facility 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 facility starts to be repaid.
We can consider support for foreign content (the cost to the exporter of purchasing goods or services from sub-contractors outside the UK) of up to 80 per cent of the contract’s value

Term
The period for payment under the facility must be at least two years.

Cost
There is no fee for the application. The premium payable for our cover is determined on a case by case basis.

How to apply
Contact UK Export Finance Articles

Disclaimer
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

Topics: Credit Facilities, Getting Started, Insurance & Risk, Loans, and Payments
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