The small to medium enterprise (SME) segment is one of the biggest employers in the country, a valuable source of innovation and a key driver of increasing productivity, yet SMEs often find it tough to access the finance required to succeed.

This can hold SMEs back from winning new business, commencing export operations and growing internationally.

The good news is that there are a number of options available to help ensure that SMEs don’t miss out on the finance they need to expand overseas.

Access to finance remains difficult

Efic’s SME Exporter Index for March 2015 found 58 per cent of SMEs believe that they will find it even more difficult to access finance for their export or international operations in the next 12 months.

It’s also worth noting that, since the start of 2014, the proportion of SME exporters expecting that access to finance would become more difficult has grown by 157 per cent.

There are likely a number of reasons for this, including that the funding requirements of many SMEs are quite specialised. This is particularly the case for those that are innovative or growing rapidly, and so don’t always fit into the standard lending approach adopted by banks.

Constant changes to lending criteria and the type of credit offered, increasing collateral/information requirements and a perceived lack of understanding about foreign markets have also been suggested by SME exporters as reasons for believing that access to finance will become more difficult.

At the industry level, new regulatory changes now force lenders to hold more capital against SME loans, given their higher risk profile, in comparison to more ‘capital-light’ products like residential mortgages.

This may mean that, while Australian banks are often supportive of the export and overseas expansion plans of their SME clients, they may be unable to approve the additional funding required.

How Efic can help

As Australia’s export credit agency, Efic is a specialist financier that delivers simple and creative solutions for Australian companies – to enable them to win business, grow internationally and achieve export success.

Efic’s ability to support SME exporters comes from its specialist knowledge and expertise in understanding their needs.

Efic has a long history of successfully operating in overseas markets, and this is reflected in its knowledge of country risk assessment, strong relationships with other export credit and government agencies, and its willingness to take and manage risk.

Efic uses a range of products to deliver financial solutions for exporting SMEs, including:

- Working capital guarantees, where it provides a guarantee to an SME’s bank if the SME doesn’t have the assets that are required by their bank as security to approve further working capital finance

- Export contract loans, where it provides SMEs with a direct loan to support a specific export contract or purchase order

- Bonding facilities, including bonding lines and contract-specific bonds, which are used if an SME’s bank can’t support the total bonding requirements for a specific project

- Overseas direct investment guarantees, where Efic can provide a guarantee to an SME’s Australian bank so that the bank can approve the funding needed for the SME to expand overseas, whether that involves building a warehouse or manufacturing facility, or buying an existing asset or business.

By offering these and other similar products, Efic has helped many Australian exporters take advantage of new contract opportunities that may otherwise have been out of reach.

Like more information?

Efic’s ultimate goal is to help all of its clients grow to the point where they can access the funding they need from their own bank to support specific export contracts.

To learn more about how Efic can help your business, please phone 1800 093 724 or email info@efic.gov.au