Yesterday the government announced an expansion of Efic’s loan powers to enable the organisation to support more small and medium-sized Australian exporters.
The Export Finance & Insurance Corporation (Efic) is Australia’s credit export agency. It provides companies with tailored financial solutions, including working capital and bonds.
Yesterday’s announcement means that Efic will gain new powers to lend directly to SMEs, which will help to reduce the substantial administrative burden and financial costs they face when accessing finance.
The current process of having two parties, Efic and the bank of the client, involved in financing these transactions means Efic’s support is less efficient and more costly to SME exporters due to the additional processing time and duplication of fees and charges.
These new powers will also allow Efic to lend for the export of all goods, not just capital goods, through a proposed amendment to the Export Finance and Insurance Corporate Act. This will allow Efic to service more SMEs efficiently and expand the pool of smaller exporters that will be eligible for financial support.
Reflecting a recommendation of the Productivity Commission Efic will no longer support resource projects located in Australia (and related infrastructure).
This decision will only have a small impact on Efic’s future operations, as the strong liquidity in global capital markets has meant that such projects continue to be difficult for Efic to support on market gap grounds.
Efic’s Structured Trade and Project Finance division will continue to support resource projects overseas, as long as the project has significant Australian content, including through SME participation.