• Date

    06 Jun 2024
  • Category

    Advisory
  • Author

    Murdoch MacLennan

Who is GEF? Little known finance guarantee scheme could boost SME exports

SME exports could grow if more companies were aware of and using ‘GEF’ – the General Export Facility – a relatively unknown but valuable government scheme designed to boost Britain’s SME exports by providing an 80% guarantee to banks for loans to businesses specifically engaging in exports.

GEF is one of several export finance initiatives overseen by the government’s Export Credit Agency which in 2023 provided around £6.5 billion of financial support to UK exporters.

The GEF scheme, however, is a relatively unknown element of the overall financial support provided to exporters and is failing to achieve any real impact across the SME sector, its main target market and where there is considerable potential to drive export volume.

Feedback from SMEs and analysis of GEF data reveals that only 5.4% or around £350m of total financial support for exporters (£6.5bn) utilises GEF. Given this, there is significant scope to dramatically increase the number of SMEs that are aware of GEF and the 80% government guarantee.

Although there is no published cap on the gross amount that the government will guarantee, it is concerning that in 2022-2023 just £350m of GEF guarantees were accessed. There is considerable potential for GEF to help SMEs build their export business, however this potential is being thwarted by low awareness of GEF, poor distribution and minimal marketing.

 

Boosting awareness

The Export Credit Agency needs to invest time and resources in ensuring that SMEs are aware of GEF, and that banks need to have GEF front of mind when helping their customers access export finance options.

Given that the government underwrites up to 80%, more banks need to proactively offer GEF as a key part of their financial support packages for the SME sector. Although there is huge potential for more banks to offer GEF to their client base, SMEs still need to satisfy their bank’s lending criteria and due diligence tests. SMEs should also take the initiative and ask for GEF when negotiating financial support.

Targeting £1 billion of GEF guarantees for SME exporters per annum as a minimum should be an achievable goal. As such, SME exports would be given a major boost if the potential of GEF can be properly unlocked.

 

The GEF criteria

GEF (General Export Facility) can provide an 80% guarantee to pool of banks to support SME’s trade facilities such as trade loans and working capital with repayment terms of up to five years.

To qualify, companies must be able to demonstrate that in any one of the last three years at least 20% of turnover has come from UK export sales or that at least 5% of turnover has been made up of UK export sales during each of the last three years.

SMEs must also have premises and employees in the UK, pay corporation tax or make National Insurance contributions, manufacture goods in the UK or sell intangibles from the UK.

 

We are here to help

If you have any questions in relation to the GEF scheme and how your business could potentially utilise, please get in touch with a member of our specialist team or your usual Azets advisor.

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Murdoch MacLennan

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Murdoch MacLennan

Partner Glasgow Glasgow City

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