SME Trade Finance Guide launched
A new guide that explains how trade-related financing can be used to grow small and medium-sized enterprise (SMEs) exporters and importers has been launched at the SME Finance Forum.
Trade Finance Explained: A Guide for SME Importers and Exporters is co-authored by TFG, ITC, the Federation of Small Businesses (FSB), Institute of Export & International Trade (IOE&IT), the British Exporters Association (BExA), Forum of Private Business (FPB), and The International Finance Corporation (IFC).
- 'The guide is being launched now to help SMEs see the facilities that are available to help them recover from COVID and respond to new orders, Deepesh Patel, TFG Editorial Director, said. Despite COVID measures, ITC sees trade in some sectors and markets picking up, with levels above those of the same period in 2019.
- 'The short-term nature of trade-related financing matches SMEs' current needs and business horizons − especially now, when the future continues to be uncertain,' Ian Sayers, ITCs Senior Adviser on Access to Financing, said.
- 'For many years, trade financing has been seen as the business of international buyers,' he added. 'It's time for SMEs to realize its potential to help them pivot into new markets, get new certifications, expand their workforce and make sustainability improvements. We hope the guide will stimulate SMEs' enthusiasm to find out more about locally available trade-related financing facilities.'
Information from the United Kingdom Trade Partnerships Programme, implemented by ITC, shows that SMEs make up more than 70% of import supply chains in emerging and developing economies trading with the UK.
At the same time, surveys by ITC show that most of these SMEs lack access to affordable trade financing or information on the subject. This lack of knowledge is reflected in comments from banks about the poor preparation and quality of most SME financing applications.
The guide describes the main types of trade finance structures available to SME importers and exporters, outlines the payment methods, risks and challenges, and shows how to access trade finance from various lending sources.