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Financial barriers holding SMEs back from export success

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With our reputation for quality and delivery, demand for Australian goods and services overseas is as strong as ever – and with this comes multiple opportunities for Australian businesses to expand their operations to international markets. 

We meet Australian businesses every day that are either involved in exporting or are considering entering into export. We see first hand the exciting successes our SMEs are achieving all over the world through the export of their innovative products and services.

We also know the challenges that many SME exporters face in realising their export ambitions. Succeeding as a small business can be hard work at the best of times, but when factoring in new and unfamiliar markets, these challenges can beome even bigger, particularly when it comes to accessing finance.

Efic recently sponsored the Australian International Business Survey (AIBS 2015), one of Australia’s largest and most in-depth surveys of internationally-active businesses. This annual survey reported on the views of 1,237 Australian businesses across 19 industry sectors which operate in international markets. About 88 per cent of these businesses are involved in exporting.

While the research showed that exporters are feeling more optimistic about the year ahead than they were this time last year, largely due to the weak Australian dollar, it also highlighted that accessing finance to fund export growth is an ongoing and significant challenge.

Small businesses often struggle with cashflow

Around a third of companies surveyed that had approached a financial institution in the last three years to expand their international business said they weren’t able to receive the funding they needed. This figure rose to almost half for small exporters, suggesting that access to finance is even more of a challenge for small businesses.

The most common reason for failed funding attempts, at 45 percent, were security issues, followed by the application being declined due to inadequate cashflow.

Small businesses often struggle with cashflow, especially when they are growing rapidly, which tends to go hand in hand with expanding into new markets.

We advise exporters to speak to their business banker who can assess the situation and advise on the

best course of action. If banks are unable to help, organisations such as Efic may be able to. Efic can provide financial support to SME exporters, or SMEs involved in an export-related supply chain, in the form of loans, guarantees and bonds to support specific export contracts.

To download the AIBS 2015 report visit http://www.efic.gov.au/aibs2015

Andrew Watson is Executive Director – Export Finance, Efic

AIBS 2015 was commissioned by the Export Council of Australia, with the support of Austrade and Efic, and was conducted by the University of Sydney.

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