A$500m ECA Stimulus for Besieged Exporters
(16 April 2020 - Australia) Australian exporters grappling with cashflow constraints resulting directly from the COVID-19 health crisis have been extended a A$500 million funding boost by Australia's export credit agency (ECA), Export Finance Australia.
Despite targeted federal government stimulus measures for small businesses such as the A$40 billion scheme for guaranteeing half the value of all new loans up to A$250,000 issued by eligible banks, many are still finding it difficult to qualify for new loans or are reluctant to increase their current debt load.
Emphasising the stress many small business owners are under, The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell has called for federal legislation requiring small businesses to be paid in 30 days, amid a surge of large corporates using the COVID-19 crisis as an excuse for poor payment times
The program is designed to aid in the recovery of offshore operations and restore a presence in international markets. The scheme will allow small to medium sized enterprises (SMEs) and Lower Corporates with turnover of A$250,000 to A$50 million (E&P equivalent segmentation) to access a capital facility administered by Export Finance Australia. Any enterprises with export links can qualify for the scheme, including those in especially hard hit sector verticals such as tourism, agriculture, retail, wholesale and education. The latest Australian Bureau of Statistics (ABS) data revealed Australian exports of rural goods fell seven percent and non-rural goods declined two percent in February.
Soon to be released, East & Partners latest H1 2020 Trade Finance research based on direct interviews with 1,900 importers and exporters confirms China is Australia's biggest export and import geography. Significant variance exists by business size however it is important to note China’s prominence had also already been declining over the last two years as internationally trading enterprises increasingly turned to other markets such as the USA and India in particular.
“The funding could help Australia be one of the first countries to start getting products back into China as the region opened up again for trade. Australia had spent a lot of money building its exports over the years and the scheme would "allow us to repair without starting from scratch all over again" stated Export Council of Australia Chair, Dianne Tipping.
"These are tough times for many trade-exposed businesses who have been some of the hardest hit by the COVID-19 crisis. Rising export costs, disruptions to supply chains and loss of markets are some of the factors that are making it difficult for exporters to access vital commercial finance. The scheme would help exporters re-establish markets or use the capital support to buy new equipment to expand” Australian Trade Minister Simon Birmingham said.
Subscribe