British exporters will receive additional help from the government in order to take advantage of new free trade agreements and bolster trade after Brexit, as announced on Monday (Dec. 7), per a Financial Times report.
Under the new program, exporters can apply for larger loans from the five U.K. high street banks, with the loans backed by a partial state guarantee that can be used to cover export costs or scale up a business.
The announcement for the new program comes as the Brexit transition period is set to end on Dec. 31, at which point there will be new customs procedures and expenses for companies to export into the EU. With the government-backed loans, officials are hoping to boost businesses with numerous export contracts, help free up cash flow, cover labor costs and increase inventory.
The government will also provide an 80 percent guarantee on money from lenders to support general exporting expenses through its U.K. Export Finance (UKEF) initiative. Minister for Exports Graham Stuart said the government was hoping to improve things for trade in general.
“The new [facility] will make a huge difference for entrepreneurs who need the financial backing to go global and benefit from our free trade agreements," he said, according to FT. "It will help us bring genuine optimism back to exporters.”
J.P. Morgan Global Head of Trade Structured Solutions James Fraser, speaking with Karen Webster earlier this year, said businesses aimed to maintain liquidity for both themselves and their partners, which meant those firms would be able to support cash flow collaboration through trade finance innovation.
He said it was important for businesses to apply the current teachings to achieve permanent shifts in supply chain activity, including accelerating supplier payment terms and continuing the supply chain finance agreements put in place amid the pandemic.
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