extended. Mexico has recently introduced the Small Business Export Credit Guarantee (GLIEX), while the Turk Eximbank is studying a new credit programme exclusively for SMEs.
Several countries have special short-term insurance schemes for smaller exporters (e.g. Australia, Belgium, Canada, Hungary, Poland, the United States). Australia developed the Export Payment Protection Policy that restructures the way clients pay for their insurance policy. Canada initiated Export Protect, which offers SME exporters on-line short-term cover for specific transactions up to CAD 250 000 for a risk-based fee, and Export Check, which provides SMEs with an on-line insurability opinion on foreign buyers. The Czech Export Guarantee and Insurance Corporation (EGAP) is preparing a new product -- Market Survey Insurance for SMEs. Although Belgium has a special short-term insurance scheme for smaller exporters, most take the standard whole turnover agreement, more than 30% of which are issued to SMEs.
Short-term (up to 180 days) insurance is available from the US Eximbank, which assumes 95% of the commercial risk and 100% of the political risk involved in extending credit to the exporter’s overseas customers. This is available to companies with an average annual export credit sales volume of less than USD 3 million for the two years prior to application and typically supports spare parts, raw materials and consumer goods. In addition, foreign market entry costs insurance is available for domestic manufacturing, services and trading companies in operation for not less than three years with annual net income from sales not exceeding the equivalent of USD 50 million.
Medium and long-term products
Australia, Canada, Germany, the Netherlands and the United Kingdom are among the countries that have medium and long-term products specially designed for SMEs. Australia has two products: 1) the Advance Payment and Performance Bond Facility which is available to exporters with the technical and financial capacity to undertake export contracts for which bond support is required (the facility only requires the exporter to lodge a 5% security); and 2) the Documentary Credit Guarantee which allows the exporter’s bank to discount irrevocable documentary credits issued in relation to an export contract by mitigating the risk on the issuing bank through the support of an EFIC guarantee.
Canada has a simplified buyer credit process, which is a simplified loan document for quick- turnaround for SMEs, and provides Pre-shipment Financing Guarantees for small firms. Since 2001, Germany (HERMES) has implemented a global credit policy (credit line cover) which enables SMEs to obtain cover for small buyer credits up to EUR 5 million. The Netherlands provides medium and long-term export credit insurance for all exporters, including SMEs. The United Kingdom has developed with Lloyds of London a Recourse Indemnity Policy to enable smaller exporters to meet recourse obligations; this provides compensation to ECGD where an exporter has defaulted under his contract and the buyer may default on the loan.
Other products and services are being offered to small exporters by export credit agencies which do not fall within the timeframe of short, medium or longer-term. These include programmes for the provision of insurance against exchange risks (Hungary) and general financing to support the domestic operations and internationalisation efforts of SMEs (Finland). The Starters in Foreign Markets programme in the Netherlands provides support up to EUR 9 000 to firms with less than 100 employees that wish to export for the first time. In order to assist small exporters, the United Kingdom increased the amount of foreign components permitted within a UK export on transactions of up to GBP 10 million.