Australia’s export credit agency (ECA) Export Finance Australia has revealed a new A$500mn capital facility available to exporters in a bid to ease the impacts of the Covid-19 pandemic on businesses.

Australian firms can now apply for loans between A$250,000 and A$50mn under the scheme, with the financing available to “established and previously profitable” exporters that, due to Covid-19, are unable to gain finance from commercial sources, says a statement published by the ECA.

“These are tough times for many trade-exposed businesses who have been some of the hardest hit by the Covid-19 crisis,” says Australia’s trade minister Simon Birmingham. “Rising export costs, disruptions to supply chains and loss of markets are some of the factors that are making it difficult for exporters to access vital commercial finance.”

The facility can be used for working capital support, capital investment, international expansion and online growth – including investment in ecommerce to boost international sales online.

Birmingham adds: “Helping our export sector to get access to business-saving finance is crucial to reducing job losses through this crisis and a critical part of the ultimate economic recovery.”

To be eligible for finance, firms must have an annual turnover of at least A$250,000 and have been trading for a minimum of two years.

The Covid-19 Export Capital Facility complements other government-led initiatives, says the ECA, including the Coronavirus SMEs Guarantee Scheme, which will support up to A$40bn of lending to SMEs. Under this programme, the government will guarantee 50% of new loans issued by eligible lenders to Australian SMEs for amounts up to A$250,000.

The Australian ECA, formerly known as Efic, has come under scrutiny in the past. A bill passed in 2019 by the government to allow the agency to finance larger overseas projects was widely criticised.

The Australia Institute, a public policy think tank, said the bill was “so broad” in outlining the types of projects and businesses it will enable the ECA to finance. “Efic could have taxpayers fund new coal power stations, then fund coal mines to fuel them, all against our broader climate change commitments,” it said in a report.


ECAs deploy cash

The new round of financing comes as ECAs around the world deploy capital packages to support domestic businesses as exporters are hit hard by lockdowns and disruptions to trade.

In Europe, following moves by the European Commission to liberalise EU-wide state aid rules, UK Export Finance (UKEF) has expanded its insurance policy to cover trade with a range of major markets, including Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland, the US and every EU member state. “Exports from the UK to these markets totalled £499bn last year, accounting for 74% of all international sales from the UK,” UKEF says.

Poland’s Kuke revealed that it would take on 100% of “both commercial and political risk from exporters and banks financing or refinancing export transactions”, while France’s Bpifrance is collaborating with the banking sector to offer “state guaranteed loans” worth a total of €300bn, available to companies with fewer than 5,000 employees.

Elsewhere, US Exim passed a series of emergency coronavirus measures in a bid to “inject liquidity into the market” and help US companies trading internationally. Congress approved a US$2tn aid bill last month, which included US$350bn in loans to small businesses, as well as a US$500bn fund to help companies more broadly.

In Africa, Afreximbank announced a US$3bn facility that will provide financial support to more than 50 nations through direct funding, lines of credit, guarantees, cross-currency swaps and other similar instruments.