Question to the Department for International Trade:

To ask Her Majesty's Government what plans they have to improve access to trade finance; and what assessment they have made of the need for a review of small and medium enterpresise (SME) capital weighting requirements for SME lending, differentiating the risk weighting for low risk trade finance from other forms of higher risk finance.

The Government supports trade finance through UK Export Finance (UKEF), whose mission is to ensure that no viable UK export fails for lack of finance or insurance. UKEF keeps its trade finance products under regular review and is making several improvements this year. In January 2020, UKEF and its bank partners agreed updated legal documentation for trade finance products to streamline processes and make it easier for the banks to access UKEF’s guarantee and support greater volumes of lending. More operational improvements will be rolled out in the Autumn to improve efficiency for banks accessing UKEF’s existing working capital and bond support products and ensuring more deals are approved in shorter timescales.

Following an announcement made by my Rt Hon. Friend the Chancellor, UKEF will shortly launch its General Export Facility to support exporters seeking general working capital from their banks. We expect this product to make UKEF’s support accessible to a much wider pool of exporting companies, as eligibility is widened beyond support for specific export contracts.

UKEF works closely with other parts of government, including the British Business Bank, on access to finance for small and medium-sized enterprises (SMEs) and is actively engaging with non-bank providers of trade finance to ensure that there are alternatives available to SME exporters with a viable proposition who are not able to access the finance they require from the high street banks. UKEF is exploring how partnerships with non-bank financial institutions might help improve access to trade finance for smaller exporters.

Capital requirements are a matter for the Prudential Regulation Authority and HM Treasury.