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Accessing Finance Overseas

What are the ways in which your business can obtain financing when exporting beyond the borders of the UK? Short-term bonds and loans can be particularly helpful when it comes to fulfilling orders from customers overseas and receiving payment for those orders. It can provide the funds needed for UK companies doing business overseas to cover expenses such as shipping, inventory, and other expenses related to order fulfilment. Short-term financing can also help UK businesses manage the risk associated with doing business overseas, buffer against this risk, allowing businesses to continue operating while waiting for payment. Options include:

UK Export Finance 

As the UK’s export credit agency, UK Export Finance works with more than 100 private credit insurers and lenders to help British companies access finance that enable international trade through bonds, loans, etc.

It can:

  • Diversify and increase sources of revenue for businesses.
  • Grow customer base internationally.
  • Make international offers more competitive.

Export finance is commonly provided by banks where businesses are registered. If they are unable to help, other banks and lenders may also be worth looking into, particularly if they are experienced when it comes to export finance.

If the bank or other lenders cannot support the business, businesses may be eligible for government-backed finance or insurance from UK Export Finance

Other overseas financing options

Trade finance

As a type of financial service that helps businesses facilitate and manage their international trade transactions, trade finance provides short-term funding to support import and export activities, such as the purchase of goods and services, shipping, and storage. The goal of trade finance is to help businesses manage the risks associated with international trade, such as currency fluctuations, political instability, and delayed payments. Typically, trade finance is provided by banks and other financial institutions. These institutions assess the risks associated with a particular transaction and provide financing based on the creditworthiness of the parties involved.

Expansion capital

Expansion Capital firms give established businesses money to grow and reach maturity. It refers to financing that is provided to a company to support its growth plans, such as expanding its operations, entering new markets, or investing in new products or services. This type of capital is often used by established companies that have a track record of revenue and earnings growth, but require additional funds to take advantage of new opportunities. Organisations that provide expansion capital include:

IPO

An IPO is when a business sells shares via the public markets, such as the Main Market or AIM operated by the London Stock Exchange. IPOs are typically suitable for established companies that have a track record of growth and profitability, and that require additional capital to fuel their expansion plans. Businesses in technology, healthcare, finance, and consumer goods sectors are often popular choices for IPOs due to their potential for growth and high valuation. An IPO can provide significant capital for a business and provide liquidity for its shareholders, though it is important to note that it comes with additional regulatory and reporting requirements. Please refer to the following five steps on how an IPO works.

  1. Preparation: The company prepares for the IPO by hiring an investment bank that helps the company prepare its registration statement, a document that provides detailed information about the company's financials, business model, risks, and other important information. The registration statement is filed with the Securities and Exchange Commission (SEC) for review.
  2. SEC review: The SEC reviews the registration statement to ensure that it meets all regulatory requirements. This process can take several weeks or even months.
  3. Marketing: Once the SEC approves the registration statement, the company and its underwriters begin marketing the IPO to potential investors. This involves roadshows, in which the company's management team meets with institutional investors to present the company's business model and growth prospects.
  4. Pricing: Based on investor demand and market conditions, the investment bank determines the price at which the company's shares will be sold. This price is typically set on the night before the IPO.
  5. Trading: On the day of the IPO, the company's shares are listed on a public stock exchange, and trading begins. The price of the shares may fluctuate based on investor demand, market conditions, and other factors.