Short-term Working Capital Guarantee
Note, as at the 10th of June 2008 NZECO is working with all major banks regarding the offering of this product to firms. The product should be available via one or more bank providers by mid-late July 2008.
Benefits of Short-term Working Capital Guarantee
Key benefits for medium sized exporters:
- Provides access to additional funding (which would not otherwise be available from your bank) to grow your business;
- No additional security needed;
- Minimal additional documentation required;
- No need to change your existing banking relationship;
- Flexible terms between 3 and 12 months;
- Available for general export funding;
- Can enable you to take advantage of immediate export opportunities.
Eligibility
The bank will determine each exporter’s eligibility for the short-term working capital product, and then recommend approval to the NZECO. The following criteria will be applied:
- Sales turnover up to $50 million;
- The goods/services exported must have a at least a 30% value add in New Zealand;
- Firm must be an established exporter (minimum 2 years) with an existing banking relationship, including lending facilities;
- The firm must be profitable and have a reasonable financial standing.
Product Features
Maximum value
Up to the amount of an exporting firm’s annual export turnover but generally limited to 20% of its total bank credit facilities.
Terms & fees
3 to 12 month terms subject to review and renewal. Renewal beyond 24 months will not be permitted.
The fee will vary depending on the risk assessment of the exporter, and generally be the bank fee + NZECO premium fee of 4%-6%.
Security
No additional security required.
We recommend that you contact your relationship manager at your bank or NZECO for further information regarding this product.
Questions and Answers
Who is eligible for this product?
Any established exporter, with turnover less than $50 million, which is profitable and has reasonable financial standing.
When does the scheme start?
It is anticipated that the first banks will begin offering the product from mid-late July 2008. Our original implementation target was late April 2008.
How do I apply?
Once the scheme is operating, contact your existing banking relationship manager or contact NZECO.
What is the approval process?
Your bank will go through its normal credit assessment procedures and if the credit process results in you being refused additional working capital only due to the lack of sufficient security and all other criteria apply, the bank will forward an application to the NZECO. The NZECO will consider the application for a working capital guarantee within approximately 2 working days.
How much can each exporter get?
Up to the amount of an exporting firm’s annual export turnover but generally limited to 20% of its total bank credit facilities.
How much does it cost?
A risk based premium of 4%-6% will be charged by the NZECO for the facility and the bank will also charge interest on the funds provided.
How long does the approval process take?
Once your bank has determined whether your firm is eligible and has applied to the NZECO, the consideration by the NZECO should take approximately two working days until final approval.
How do I apply and what do I need?
When available, the NZECO will work with you and your bank to consider whether you qualify for the short-term working capital guarantee. You should discuss your working capital requirements with your bank to see if you may qualify for the short-term working capital guarantee, or are able to increase your facilities without the need for the working capital guarantee.