Government-Backed Trade Finance
Trade, in particular exports, benefit countries’ economies significantly. Therefore, most countries in the world, including Australia, provide a range of federal and state support schemes, grants and loans to encourage exports. Taking full advantage of these schemes is a great way to reduce finance costs and also potentially offset some of the extra research and marketing costs associated with overseas trade. See below for an outline of the most significant Australian government-backed trade support schemes below.
Export Finance Insurance Corporation (Efic)
The Australian Government’s export credit agency, named Efic, provides loans, guarantees and bonds for Australian businesses looking to expand internationally, secure export-related contracts or win export-related supply chain contracts.
Efic will work with commercial lenders to provide financing that supplements the financing you have from commercial lenders and markets. Efic will also lend directly to companies that are unable to access the private lending markets due to various circumstances including high growth or lack of collateral.
Efic loans are accessible for businesses making revenues of at least AUD$250,000 in the past financial year. Efic provides both traditional loans secured by collateral as well as Small Business Export Loans that are not secured by fixed collateral and have fast approval times but cost incrementally more than traditional loans.
Efic bonds help exporters secure contracts by reducing the risks of international trade for buyers. Should you be unable to deliver on your obligations in relation to a contract, an export bond will help reduce the losses for your buyer(s). The types of bonds provided include Advance Payment Bonds, Performance Bonds, Warranty Bonds and US Surety Bonds.
Export Market Development Grants (EMDG)
The EMDG scheme is an Australian Federal Government financial grant program to support small and medium-sized companies currently exporting or looking to start to export. The scheme reimburses 50% of eligible export-related expenses above $5,000. The applicant can receive up to $150,000 per annum and is eligible for a total of 8 grants.
Eligible applicants include Australian companies, associations, cooperatives, trusts, partnerships and individuals that carry out or support the sale of goods, services or intellectual property outside of Australia or that promote certain services to non-residents or tourists within Australia. Applicants should have earnings of less than $50m per year and be spending at least $15,000 on eligible export promotion activities.
The types of expenses which the scheme reimburses includes marketing visits and consultancy expenses, overseas buyer expenses, advertising and promotion expenses and overseas representation expenses. Expenses related to sales to New Zealand, North Korea and Iran cannot be claimed. Neither can costs be claimed that are capital in nature, related to sales or product development or are fraudulent or criminal.
The scheme is administered by Austrade and applications can be made through their website but a broker can help you understand if you are eligible for the scheme and help you collect all the paperwork necessary for a successful application.
Other Federal and State Grants
There is a wealth of different federal support schemes and grants for businesses involved in international trade. This includes the extensive guidance and assistance available from trade promotion organisations, Chambers of Commerce, and Australian diplomatic missions around the world. The Duty Drawback Scheme provides a refund on any import duties paid for goods that are later exported. Austrade provides further assistance to small and medium sized businesses through the TradeStart network that helps smaller businesses succeed abroad. Finally, there are scholarships available including the Women in Export Scholarship.
On a state / territory level, each state operates separate trade support schemes. These schemes range from market intelligence and support to financial assistance programs and grants.
The business.gov.au website has a search function that allows you to see which government grants and assistance programs you are eligible for.