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Financing your export business

Winning an export order or contract is hard work, but the work does not stop there.  Making sure your business can fund the contract, and making sure you get paid by your customer, are key issues that every exporter faces.

How much money do you need to export?

Your export budget will be largely determined by the countries or markets you are targeting and the products or services you are exporting.

For example, a market visit to the United States will usually be more expensive than a market visit to a country in Asia, while sending away samples of high end medical devices will cost more than sending small samples of wine.

An export budget should cover all the costs you are likely to incur when marketing your products or services offshore, as well as the costs needed to run your export business. Allowances should be made for:

  • Marketing and market entry costs such as:
    • Regular visits to your target markets.
    • The provision of samples.
    • Potentially hiring a dedicated export manager if the owner of the business or sales manager does not have the time to cover this role.
    • Market entry consultants and legal or business advisory services.
  • Working capital:
    • The reality is that payment for most export contracts is received by the exporter after delivery of the goods or service.
    • This means that for products, production costs such as raw materials will need to be purchased prior to you being paid by your customer. Delivering services may not incur such significant input costs; however, some outlay is usually required before receiving payment as well.

A good source of information on financing your export business through different stages of development is the Federal government’s Export Finance Navigator, developed by the Export Finance Insurance Corporation (EFIC). 

For more information, go to: www.exportfinance.gov.au.

A wide range of funding options

A wide range of funding options now exists, with various grants, venture capital and equity sharing deals increasingly commonplace.

However, banks remain the easiest and most approachable method of gaining access to funding, while most banks also offer tailored services for exporters. So your existing bank manager might be your wisest first port of call.

Venture capital

Venture capital can be a financial vehicle if you are comfortable with having a third party take an equity stake – and share of the profits – in your business.
As a first step in researching the venture capital market go to the Australian Private Equity and Venture Capital Association Limited’s website at www.avcal.com.au.      

Australian Federal and state government assistance

The Australian Federal government and the state governments offer assistance to exporters through a number of government grants, loan facilities and reimbursement schemes.

Federal: Export Finance Insurance Corporation (EFIC)

Export Finance Insurance Corporation (EFIC) is the Australian government’s export credit agency.
EFIC provides finance and insurance to help Australian exporters overcome financial barriers as they grow their businesses overseas. Dealing directly with exporters or their banks, EFIC provides loans, guarantees, bonds and insurance – all of which can be tailored to meet exporters’ needs.
For more information, go to:  www.efic.gov.au

Federal: Export Market Development Grants (EMDG) scheme

The EMDG scheme, administered by Austrade, is a long standing form of assistance to exporters. The scheme pays grants to a large number of Australian exporters each year.

The EMDG scheme allows up to fifty per cent of expenses incurred on eligible export promotion activities above a $20,000 threshold to be claimed back in the year they were incurred.

Eligible applicants are able to apply to the scheme for up to seven grants.

To access EMDG for the first time, Australian businesses need to have spent $20,000 over two years on eligible export marketing expenses.

Full information on EMDG can be found at: www.austrade.gov.au/EMDG

Federal and state: other grants

There is a wide range of other government grants and financial assistance. 

Export Finance Navigator, developed by EFIC, has an online grants finder specifically designed for exporters through different stages of business. The grants finder provides information on both state and federal government financial assistance.

For more information, go to: www.exportfinance.gov.au.

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Checklist 

Financial assistance

Don’t be overwhelmed by financing an export development program. There are a range of options available.

Seek help. Your bankers can provide considerable assistance.

There are many programs to help you with grants to establish your export business.

EMDG is the major financial support facility.

State and territory governments also offer assistance.

Check out the range of financial products to help you get started in export.

Credit insurance is a must for new exporters.

Factoring is also a facility to consider to help your cash flow.

Accountants can help you manage the application process.

Export Finance Navigator

EFIC

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