What is export credit? A guide for UK small businesses

Export credit is finance, guarantees or insurance that help businesses sell goods and services overseas. It can mean giving an overseas buyer time to pay, borrowing to fund an export order, or insuring against a buyer failing to pay. In the UK, the government supports exporters through UK Export Finance (UKEF), the UK's export credit agency.

For small businesses, export credit can make it easier to win international contracts and protect cash flow while waiting to be paid. This guide explains what export credit means, how it works, what support is available and the advantages and disadvantages to consider.

Export credit meaning

Export credit as a term covers a few different meanings:

• Credit you give to overseas buyers. Letting a customer abroad pay 30, 60 or 90 days after delivery, rather than upfront. This is a form of trade credit.

• Finance that supports an export deal. Loans or guarantees that help you fund an order, or help your buyer pay for what they're buying from you.

• Export credit insurance. Cover that protects you if an overseas buyer doesn't pay.

What links them is risk and timing. Selling abroad often means longer payment terms, unfamiliar customers and currency or political risks. Export credit helps manage those risks so you can take on international work with more confidence. It's one part of the wider world of trade finance.

How export credit works

Export credit usually steps in at one of three stages of an export deal.

Winning the contract

Overseas buyers often want time to pay, especially for larger orders or capital goods. Offering credit terms, or arranging finance for your buyer, can make your offer more competitive. With buyer finance, a bank lends to your overseas customer so they can pay you, and an export credit agency may guarantee that loan.

Fulfilling the order

Large export orders can mean paying for materials, staff and production long before your customer pays you. Working capital finance helps cover those costs. Some overseas buyers also ask for bonds, such as advance payment or performance bonds, which banks may only provide with extra support.

Getting paid

Once you've delivered, the main risk is that your buyer pays late or not at all. Export credit insurance can cover you against non-payment, whether that's due to the buyer's insolvency or events outside their control, such as political disruption.

What is an export credit agency?

An export credit agency (ECA) is a public body that helps businesses in its country export, usually by providing guarantees, insurance and sometimes direct loans. ECAs step in where private banks and insurers can't or won't take on the full risk, for example in markets that are harder to insure or for contracts on longer terms.

Most major economies have an ECA, and they're designed to work alongside commercial lenders rather than replace them.

The UK export credit agency: UK Export Finance

UK Export Finance (UKEF) is the UK government's export credit agency. Its stated aim is to ensure "no viable UK export fails for lack of finance or insurance", at no net cost to the taxpayer. UKEF has been operating for over 100 years and can support exporters of any size, across all sectors.

UKEF's support is organised around three goals: helping businesses win contracts, fulfil orders and get paid.

Helping you win contracts

UKEF can guarantee loans to overseas buyers so they can buy from UK businesses, through products such as buyer credit facilities and lines of credit. This means you can offer your customer finance as part of your deal.

Helping you fulfil orders

UKEF offers partial guarantees to banks so they can lend to exporters, including:

• the Export Working Capital Scheme, which supports working capital loans for export contracts

• the Bond Support Scheme, which helps banks issue contract bonds

• the General Export Facility, which supports trade finance facilities for businesses with an established export track record

These are usually accessed through your bank or another participating lender, rather than directly from UKEF. Each scheme has its own eligibility criteria. For example, the General Export Facility is aimed at businesses whose exports make up a set share of turnover.

Helping you get paid

UKEF's export insurance policy can protect you against the risk of not being paid by an overseas buyer, particularly where cover isn't available from private insurers. It also offers bond insurance.

How to get support from UKEF

UKEF has a network of regional export finance managers who offer free guidance to businesses. You can also speak to your bank or one of UKEF's approved export insurance brokers. Check the latest scheme details and eligibility on gov.uk before you apply.

Advantages of export credit

Used well, export credit can help your business grow overseas while keeping risk under control.

• Win more contracts. Offering credit terms or buyer finance can make your offer more attractive than competitors who ask for payment upfront.

• Take on bigger orders. Working capital support helps you fund production without draining your cash reserves.

• Protect against non-payment. Insurance reduces the impact if an overseas customer pays late or fails to pay.

• Enter new markets. Support from an export credit agency can make it more practical to sell into markets where risks are harder to judge.

• Access to bank finance. Government guarantees can encourage banks to lend or issue bonds when they otherwise might not.

• Protect your cash flow. Getting paid sooner, or having protection if you're not, keeps day-to-day finances steadier.

Disadvantages of export credit

Export credit also has costs and limits to weigh up.

• Cost. Insurance premiums, guarantee fees and interest all add to the cost of a deal, which can eat into your margin.

• Paperwork. Applications can be detailed, with information needed about your business, your buyer and the contract.

• Time. Arranging finance, guarantees or insurance can take longer than a standard business loan, which may not suit tight deadlines.

• Eligibility. Schemes have their own criteria, for example around export history or UK content, so not every business or deal will qualify.

• Partial cover. Guarantees and insurance usually cover a percentage of the risk, not all of it, so some risk stays with you.

• Extended payment terms. Offering credit to overseas buyers means waiting longer to be paid, which puts pressure on your own cash flow.

Export credit advantages and disadvantages at a glance

Is export credit right for your business?

Export credit can make sense if you're selling overseas on credit terms, taking on orders that stretch your working capital, or trading in markets where the risk of non-payment is higher. For smaller or one-off orders, the cost and paperwork may outweigh the benefits.

Before deciding, it's worth:

• working out how long you'll wait to be paid and what that means for your cash flow

• checking your buyer's credit history and the risks in their market

• speaking to your bank or a UKEF export finance manager about what's available

• comparing costs, including any fees, premiums and interest

Export deals can involve complex contracts and tax considerations such as VAT on exports, so it's worth taking advice from your accountant or a professional adviser.

Other ways to manage cash flow when you export

Export credit isn't the only way to handle the cash flow gaps that come with selling overseas. Depending on what you need, Funding Circle's range can help.

Working capital loans

A working capital loan gives you a lump sum to cover day-to-day costs while you wait for overseas customers to pay. You repay in fixed monthly instalments, so you know exactly what's going out and when. You can use it to buy materials for a big export order or cover wages during a long payment cycle.

FlexiPay

FlexiPay is a cash flow companion, credit you can flex around your business. You can use it to pay suppliers, stock orders or bills upfront, then choose to repay over 1, 3, 6, 9 or 12 months for a flat fee from 1.99% per transaction. It can help you keep suppliers paid on time while you wait for export invoices to clear. Note, 1 month repayment terms only available to those who took out a FlexiPay facility after July 2024. 

Cashback business credit card

If your business spends abroad, the Funding Circle Cashback business credit card can be used anywhere Visa is accepted, with no foreign exchange fees. You earn 2% cashback for the first 6 months or up to £2,000, whichever comes first, then 1% uncapped, and get up to 42 days interest-free as a grace period when you clear your balance in full each month.

Eligibility and important information

To apply, your business needs to be a UK limited company or LLP with at least 1 year of trading history. If you're a limited company or LLP, you can check your eligibility without affecting your credit score.

*Note, the information contained in this document is for informational purposes only and not to be treated as financial, tax or legal advice. Please consult professional advice prior to taking any credit facility. 

Export credit FAQs

What is export credit in simple terms?

Export credit is support that helps businesses sell abroad. It can mean giving overseas buyers time to pay, finance to fund an export order, or insurance against a buyer not paying. It helps exporters compete for contracts while managing the risks of trading internationally.

What is the UK's export credit agency?

The UK's export credit agency is UK Export Finance (UKEF), a government department. It provides guarantees, insurance and loans to help UK businesses win export contracts, fulfil orders and get paid. Most of its support for small businesses is accessed through banks and approved brokers.

Can small businesses use UK Export Finance?

Yes. UKEF can support exporters of any size and in any sector. Each scheme has its own eligibility criteria, so it's worth speaking to your bank or a regional UKEF export finance manager about what might suit your business.

What is the difference between export credit and trade credit?

Trade credit is any arrangement where a supplier lets a customer pay later. Export credit applies this, and related finance and insurance, specifically to international sales. It often involves extra support, such as guarantees or insurance, because of the added risks of trading overseas.

What is export credit insurance?

Export credit insurance protects you if an overseas buyer doesn't pay, for example because they become insolvent or political events stop payment. It can be arranged through private insurers or, where cover isn't available privately, through UKEF.

Disclaimer

04/10/26 – While we want to help as much as we can, the information found here is provided solely for informational purposes and should not be considered financial, tax or legal advice. Readers should seek independent tax advice from a qualified professional. To the extent permitted by law, Funding Circle does not accept any liability for any loss or damage which may arise directly or indirectly from the use of, or reliance on, the information contained here. If you have any questions, please speak to your professional adviser or seek independent legal advice.