Efic, Australia’s export credit agency, has had its loan powers expanded to assist more SME (small and medium-sized) Australian exporters.
The federal government will reduce the substantial administrative and financial burden exporters face when accessing finance to ensure a more efficient process.
Under the new changes, Efic will lend for the export of all goods, not just capital goods.
SMEs will be able to conduct business through standard form documentation. Turnaround times will be reduced via a new accelerated execution process and lower minimum support thresholds.
Efic will gain new powers to lend directly to SMEs, which will help to reduce the substantial administrative burden and financial costs they face when accessing finance.
The current process of having two parties, Efic and the bank of the client, involved in financing these transactions means Efic’s support is less efficient and more costly to SME exporters due to the additional processing time and duplication of fees and charges.
And a proposed amendment to the Export Finance and Insurance Corporate Act will allow Efic to lend for the export of all goods, not just capital goods. This will allow Efic to service more SMEs efficiently and expand the pool of smaller exporters that will be eligible for financial support.
Reflecting a recommendation of the Productivity Commission Efic will no longer support resource projects located in Australia (and related infrastructure).
This decision will only have a small impact on Efic’s future operations, as the strong liquidity in global capital markets has meant that such projects continue to be difficult for Efic to support on market gap grounds.
Efic’s Structured Trade and Project Finance division will continue to support resource projects overseas, as long as the project has significant Australian content, including through SME participation.
“These new powers are a strong endorsement by government of our mandate to provide financial solutions to exporting SMEs and those SMEs in an export supply chain,” said Andrew Hunter, Efic’s Managing Director.
“These changes are a positive outcome for our clients and will allow us to help even more SME exporters,” Mr Hunter said.
Efic helps Australian companies looking to expand their business operations overseas.
Through its loans, guarantees, bonds and insurance products, Efic has helped many Australian exporters and subcontractors take advantage of new contract opportunities that may otherwise have been out of reach.