Financing your export business

Checklist

  • 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.

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 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.

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 solutions for Australian exporters.

Efic, the Australian Government’s export credit agency, is a specialist financier that delivers simple and creative solutions for Australian companies to enable them to win business, grow internationally and achieve export success. 
 
Through its loans, guarantees and bonds, Efic has helped many Australian exporters and subcontractors take advantage of new contract opportunities that may otherwise have been out of reach. 
 
For more information contact Efic by calling 1800 093 724 or visiting the website. Get the latest Efic export news by subscribing to their email updates on their website
 

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 $15,000 threshold to be claimed back in the year they were incurred.

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

To access EMDG for the first time, Australian businesses need to have spent $15,000 over two years on eligible export marketing expenses.

Full information on EMDG.

Federal and state: other grants

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

Search the free Grants & Assistance tool to find support, funding, assistance packages and loans for your business from all levels of government.

Disclaimer

Austrade does not endorse or guarantee the performance or suitability of any introduced party or liability for the accuracy or usefulness of any information contained in this Report. Please use commercial discretion to assess the suitability of any business introduction or goods and services offered when assessing your business needs. Austrade does not accept liability for any loss associated with the use of any information and any reliance is entirely at the users’ discretion.

Why You Need To Know About Foreign Bribery and its Implications:

Bribing, attempting to bribe or facilitating bribery of a foreign public official is a serious crime and amendment to the Australian Criminal Code in 1999 makes acts of this nature overseas punishable in Australia. Companies can also be held criminally responsible for the acts of their agents. The extraterritorial nature of these penalties reflects the serious criminal nature of bribery and the detrimental effects it has on Australian trade and reputation, and international governance.

It is no defence that such acts may be common practice in some countries. You must be aware of the types of activities that are legal and illegal when interacting with foreign officials. The offence applies regardless of the outcome or result of the bribe or the alleged necessity of the payment: companies and individuals may be held liable regardless of whether or not the bribe obtains the advantages sought and whether or not the bribe was considered necessary to do business. Refer to Attorney-General’s Department Foreign Bribery website.