The main thrust of the government agency offering for export finance thus far has been a short term credit facility starting at R1 million that will enable a business to finance a confirmed order, a contract or a tender from overseas. The value of the facility is usually set at 75% of the value of the contract. It can go up to 100% if you have insurance, a letter of credit and foreign exchange cover in place, but the costs need to be weighed up against the benefits.
For more established businesses, the finance is in the form of a revolving facility. Usually you have 180 days to repay any monies withdrawn from the facility. Interest rates vary and are dependent on developmental factors such as job-creation potential of the business, as well as the risk of the contract. There is also a small raising fee which usually forms part of the first loan amount, as well as a charge per withdrawal.
As a first time exporter, you are unlikely to be approved for the revolving credit facility discussed above. However, if you have concluded a deal that is worth more than R1 million, then you can apply for export finance to cover the cost of competing the order. If you have an urgent order, make sure to let them know the timelines as some of the agencies have put a fast track process in place and they have a turnaround time of only 11 days!
When you approach a government lender for export finance, you might find that they instead direct you to a specific industry division. So, even if export finance does not appear on their list of offerings, check first with your specific industry sector as it could well be included in these offerings.
Finfind provides its services free of charge to businesses seeking finance. Our primary purpose is to link SMEs with all the relevant finance providers and finance products that match their funding needs. As a matching service we are not required to be a registered finance provider as we do not loan money directly.