If you run a business that exports products or services, your buyers will usually have a longer period of time to pay their invoices.
You can borrow money to release cash for your business before these invoices are paid. This is called 'export finance' or 'trade finance'.
Export finance can be:
- an overdraft
- a type of 'invoice finance' (using unpaid invoices to raise cash)
- a loan
Using export finance
Export finance is mainly for businesses that:
- sell to other businesses
- have a lot of invoices relating to exports
- have a good credit history
- have good procedures to make sure invoices are paid (credit control)
- are established and profitable
- have audited and monthly accounts
Who can't use export finance
You can't use export finance if you sell directly to the public.
You also can't normally use export finance if you only have a small number of customers.
There could be exceptions to this, for example if you have one large customer who the lender feels is reliable.
If you don't have a lot of exports, you might want to consider other ways of funding your business, such as:
- selling shares (equity finance)
- borrowing money against something you own or plan to buy (asset finance)
- getting a temporary overdraft on your bank account
Make it to Market grants
Export finance is only available to businesses who are already exporting.
If you're looking to start exporting a product or service you can apply to Scottish Enterprise for a Make it to Market grant.
A Make it to Market grant can help you get your products or services ready to be exported internationally.
Find more information and apply for a Make it to Market grant on the Scottish Enterprise website.
Choosing a lender
Export finance is provided by:
- specialised lenders
It's worth checking with your bank first, to see if they can offer your business export finance.
When choosing any lender you should:
- check they are reputable
- find out what interest or fees they charge
- compare quotes from different lenders
UK Export Finance
UK Export Finance is run by the UK government and provides funding to:
- businesses that export
- overseas businesses buying exports (buyers)
They can help if your business doesn't have enough security to borrow from a lender.
UK Export Finance can:
- provide insurance to businesses exporting to certain countries
- offer guarantees to banks providing loans to export businesses
- guarantee loans for overseas buyers
- give loans to overseas buyers
You can find more information about UK Export Finance on GOV.UK.
What lenders check
Before lending any money, lenders will check your business is suitable for export finance.
This will include checking:
- your credit history
- the credit history of your buyers
- the type of invoices your business uses
- your procedures to make sure invoices are paid (credit control)