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How to overcome the barriers to accessing export finance

Australia’s small business exporters are concerned about accessing finance for their export journey. This isn’t a new concern, but it is one that can be addressed.

This article outlines some of the perceptions of, and challenges in, accessing export finance, as well as the ways that Australian small businesses are overcoming this challenge.

Access to finance concerns

Of the 800 exporters that we interviewed as part of our latest SME Exporter Index research, 53 per cent of small and medium-sized enterprises (SMEs) expect even greater difficulty in sourcing finance for their overseas business activity over the next 12 months.

And the smaller the business the greater the difficulty accessing credit becomes, with 37 per cent of companies with a turnover between $100,000 and $1m expecting new financing to become more difficult.

SMEs often highlight negative experiences with financial institutions, weakened financial performance, and banks’ lack of understanding of potential offshore markets as the main barriers to accessing finance.

But there are reasons to remain optimistic. Many Australian exporters are turning to alternative sources of funding, such as crowdfunding or alternative financial institutions to banks.

An Australian success story

One such example is Perth-based engineering company, Energy Made Clean (EMC), which provides commercial clean energy solutions.

Established in 2006, EMC specialises in the design, manufacture and installation of wind, solar, geothermal, heat pumps, water pumping and hybrid systems.

EMC primarily works on large-scale solar power design, alternative energy projects and the installation of hybrid power systems across Australia.

Barriers to export finance

Recently, EMC secured a significant new contract with the Commonwealth Scientific and Industrial Research Organisation (CSIRO).

The contract was to provide solar power generation infrastructure to the Murchison Observatory, which generates data that is exported to astrophysics research centres around the world.

Given the CSIRO was providing an advance payment, it required an advance payment bond as security. While EMC’s bank was able to provide this bond, it required EMC to provide 100 per cent cash cover.

This would have tied up EMC’s precious working capital and so EMC’s bank suggested EMC speak to us.

Overcoming the barriers to export finance

We provided a $2.43 million advance payment bond to help EMC secure this high-profile contract. The bond ensured the CSIRO could proceed with the advance payment, allowing EMC to complete the contract successfully.

This success also helped EMC secure the contract for Phase 2 of the CSIRO’s project, which was for the provision of power storage infrastructure.

Efic’s advance payment bond of $2.59 million again gave the CSIRO the security it needed to release the advance payment for this phase.

Being able to fulfil complex projects like this successfully puts EMC in an excellent position to secure similar global projects that require clean energy solutions.

Help for small exporters 

While barriers to export finance remain a concern, there are options for small businesses if they know where to look.

Overseas markets offer excellent opportunities for Australian companies who are looking to grow their business and take the next step.

As Australia’s export credit agency, we’re able to provide financial support for small to medium business exporters to help them fulfil export contracts.

For more information on how to overcome financial barriers to export, download our free eBook for SMEs, Export-related Finance.

About the author

Andrew Watson, Executive Director, Export Finance, Efic

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Andrew Watson

Andrew Watson

head of the SME team at Efic

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