A report by the House of Lords Committee on Small and medium-sized Enterprises, Roads to Success: SME Exports, recognises that UK Trade and Industry (UKTI) and UK Export Finance (UKEF) have a crucial role to play if the UK is to achieve export-led recovery.
The Committee notes the very ‘small number of SMEs’ helped by UKEF with only 21 receiving help from the agency up to August 2012.
The report calls for UKEF services to be better promoted both to SMEs and banks that act as the gatekeeper to the scheme.
The Committee says that unless banks are prepared to take on some of the risks of lending to exporters then UKEF’s programmes are ‘dead in the water’.
On availability of finance for SME exporters from banks more generally, the Committee finds that the transition from loan decisions being made by local bank managers to a centralised process driven by formulae has weakened SME access to bank finance.
The Committee says that local bank managers are much better placed to make informed decisions about loan applications from small local businesses. The Committee goes on to argue that SMEs must also do more to explore alternative sources of finance to invest in export efforts including non-clearing banks, equity funding and crowd sourcing. It says UKTI must to do more to raise awareness of these sources of alternative funding.
Phil Couchman, CEO of DHL Express UK & Ireland says, ‘It’s clear that SMEs need all the support they can get when taking the first steps into international exporting, as our own research into international SMEs has found that those engaged in international markets are twice as likely to be successful as those that only operate domestically.
‘Of the SMEs surveyed, 26 per cent of the companies that were trading internationally, significantly outperformed their market, in contrast to only 13 per cent of those with operations only in their home country.
‘Furthermore, as the SME committee report mentions, the information gap on international trade presents a significant stumbling block for SMEs which needs to be addressed by the UKTI and UKEF.’
The Committee suggests that UKTI does a good job with companies it supports but notes that awareness of UKTI is low.
The report states that UKTI should be required to work with Local Enterprise Partnerships (LEPs) to raise awareness of their services among SMEs and the government should consider a specific fund for which LEPs could bid to support SMEs access UKTI services.
