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Short-term Working Capital Guarantee

Page updated 26 Jan 2011

The NZECO short-term working capital guarantee to banks enables SME exporters to access further working capital to deliver on export contract(s) when they are at bank lending limits. The extension of a facility can provide the exporter with the liquidity and confidence to deliver on contracts and compete more effectively in the international marketplace. It is expected firms will most likely require the support for either the pre-shipment period or prior to repayment of the export order by the buyer. Applications require the support of a participating lending bank. SMEs are defined as having less than NZD$50m turnover.

Participating Banks (as at January 2011)

  • Kiwibank
  • Westpac
  • ANZ / National

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 deliver on specific export contract(s);
  • Flexible terms up to 12 months;
  • Can enable you to take advantage of immediate export opportunities;
  • Can enable you to access additional funding or facilities prior to payment of the export contract(s).

Eligibility

The bank and the NZECO 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;
  • The firm must meet a credit assessment of the NZECO. The NZECO will assess the technical, managerial and financial capabilities of the exporting firm.

Terms & costs

Up 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 up to 6% per annum.

How do I apply and what do I need?

Your bank and the NZECO determine 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. If your relationship manager is unaware of the product please get them to call the NZ Export Credit Office on 04 917 6080 and request to talk to the working capital guarantee product specialist.

What is the approval process?

Your bank will go through its normal credit assessment procedures and if the process results in you being refused additional working capital due to you reaching credit limits, and the bank selects you as a suitable NZECO short-term working capital guarantee client they will forward an application to the NZECO. The exporter is also required to provide an exporter statement and supporting information, including financials. The NZECO will consider the application for a working capital guarantee. This can take up to 15 working days. The bank then provides a result of the decision to you and your bank. If you have been accepted, you will be provided premium pricing and have a period of time to accept the terms offered by your bank and NZECO.

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