B2B Payments

UK Government Recruits Big Banks For SME Trade Finance

As part of a broader effort to keep the economy strong post-Brexit, the United Kingdom has reportedly reached a deal with the nation’s largest banks to provide trade finance to SMEs that are exporting overseas.

According to The Financial Times on Wednesday (July 12), Barclays, HSBC, Lloyds, RBS and Santander are partnering with the United Kingdom to extend trade finance to exporting small businesses (SMBs) and their suppliers. Trade secretary Liam Fox said the move aims to make access to capital easier for those SMEs and their suppliers as the nation works to catch up to other EU markets, like Germany, by boosting exports.

Reports said the agreement will see the government giving banks a guarantee to reduce some of the risk of lending to SMBs. Government body U.K. Export Finance will take on 80 percent of the risk of the loan or bond.

According to Fox, this kind of trade finance “lifts a common barrier to exporting,” and will help SMEs “seize the global demand for British exports.”

One unnamed source told the news outlet that U.K. Export Finance will hopefully increase lending volume by working with these top banking entities. The body offers trade financing itself, but the source said that working with FIs will make that process more efficient.

Reports said U.K. Export Finance has provided nearly $645 million to 300 companies since it began offering trade finance in 2011.

The government’s collaboration with large banks is significant considering they have pulled back from small business lending in the wake of the financial crisis, a pattern seen in multiple markets across the globe. That pullback gave rise to alternative FinTech lenders, but with Brexit creating an air of political uncertainty, many SMEs are still struggling with cash management.

Late last year, research from Hudson Weir found Brexit could be to blame for some SME insolvencies.

“Brexit is unlikely to bring good news for small businesses, and it seems now it’s just a question of how bad it’s going to be,” said Hudson Weir’s Hasib Howlader in an interview with SmallBusiness.co.uk at the time. “With more than 40 percent of small businesses struggling to survive beyond five years, even in a pre-Brexit climate, it’s now more important than ever for small businesses to be looking for warnings signs that their business may be unhealthy.”



Digital transformation has been forcefully accelerated, but how does that agility translate into the fight against COVID-era attacks and sophisticated identity threats? As millions embrace online everything, preserving digital trust now falls mostly on banks and FIs. Now, advances in identity data and using different weights on the payment mix afford new opportunities to arm organizations and their customers against cyberthreats. From the latest in machine learning for fraud and risk, to corporate treasury teams working in new ways with new datasets, learn from experts how digital identity, together with advances like real-time payments, combine to engender trust and enrich relationships.

Click to comment