A knock-back from the bank need not put an end to your exporting plans. There are alternatives available that can even be tailored to suit the needs of your business.
Speaking on the My Business Podcast, former federal small business minister and Efic ambassador Bruce Billson says that access to finance is a major concern for many businesses, particularly those looking to export goods or services.
“What can happen is you can beaver away, secure an export contract, get back home and talk to the team and say, ‘Oh, guess what? We've just won this contract. But, that's six months of production we need to get out the door in six weeks. How are we going to have the working capital to scale up and actually execute on that contract?’
“They might then rock around to their regular bank, and the bank goes, ‘Look, that's really exciting. Good on you. Congratulations, but no cash from us because you've maxed out your line of credit. Do you have another house that you can bring forward as security?’”
Security is a particular sore point for many Australian businesses. According to the 2016 Australian International Business Survey, a third of businesses complained of an inability to obtain finance, and from that, two-thirds stated security was the main reason they could not secure that finance.
“What Efic does is it steps in,” Bruce says.
“You've got an export contract? Great. We will provide you with some finance facilities to help you execute on that.”
Available to SMEs is an export line for up to $250,000, with decisions turnaround within nine days. As well as extending credit, the government-created agency also provides support with the administration involved with exporting, such as contracts, track record and the business owner’s ability to execute on the contract.
What may be the most important factor, however, is that Efic does not require assets as security for a loan. Another option instead of lending directly is for the agency to work with a business owner’s bank to help them secure finance.
“That's just one of the ways that Efic can help. That's why I'm such a fan of Efic because they're there, providing solutions to exporting small-to-medium-sized enterprises that have got export contracts,” says Bruce.