The Export Finance and Insurance Corporation has struck an agreement with the Commonwealth Bank to guarantee the loans given to small business exporters.
EFIC is a government body that is tasked with helping exporters secure financing.
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Its agreement with Commonwealth Bank will see it become involved in negotiations between the bank and exporters, and where it is satisfied as to the risk it will offer to guarantee the loan on behalf of the exporter.
This will allow exporters to access more money without necessarily having to put their assets on the line.
The agreement follows from similar announcements made over the past year with Westpac and ANZ.
Andrea Govaert, EFIC’s Executive Director, SME and Mid-Market says: “Some of the exporters EFIC has supported have such potential with innovative products and incredible business acumen, but their finances are absolutely stretched getting the business to where they are, and the value of their assets is insufficient to enable the lender to provide additional finance.”
“Guarantees that EFIC issues under the agreement with Commonwealth Bank can help Australian businesses to finance their export contracts and keep growing their businesses internationally.”
This is particularly crucial in the current environment, according to EFIC SME and Mid-head of alliance and product Alex Fernandez.
“During the GFC there was a reluctance to lend. In other circumstances banks take the risks themselves.”
“We do think that in the current environment a lot of exporters need help.”
“The last 18-months have been very busy for us.”
He added that in all circumstances, exporters were exposed to a lot more risks than many other businesses, and so often had to face higher collateral burdens when seeking a loan.
Fernandez declined to give an average amount for the loans guaranteed by EFIC, saying that they worked with exporters to tailor customised solutions around their circumstances, and so the loans they ended up getting varied considerably.