By means of an Export Guarantee, an exporter can acquire pre-delivery or post-delivery financing for working capital from a bank.
An Export Guarantee can also serve as countersecurity for a bank when a bond is given in favour of a foreign buyer (a bid bond, an advance payment bond, a performance bond or a warranty period bond).
Terms and conditions of the Export Guarantee
In one way or another, the project must benefit economic development in Finland; in other words, it must serve a Finnish interest.
Finnvera’s guarantee covers a maximum of 80% of a loan or other financial commitment.
Export Guarantees can be issued for the following purposes:
- provision of financing for pre-delivery working capital needs in export projects, such as financing for manufacturing costs and raw material purchases
- provision of financing for post-delivery working capital needs (financing to cover the buyer’s payment period
- bonds pertaining to delivery contracts (bid bonds, advance payment bonds, bonds for manufacture, delivery and warranty periods)
No limits are applied to the size of eligible projects. Export Guarantees can also be issued to companies other than SMEs. In general, financing is not available for exports to subsidiaries or associated companies. However, if the exporter is a domestic parent company and the end client is a buyer outside the Group, exports may also take place via a subsidiary or an associated company.
No restrictions are placed on the business sector in export projects.
Loans and guarantees granted by Finnvera are considered to include State aid if the price an enterprise pays for the financing is lower than the reference price determined by the EU Commission. Owing to international agreements, however, export guarantees must always be priced so that they do not include aid.
The price of the Export Guarantee
The guarantee-holder is required to pay an annual guarantee commission that depends on the profitability of the client company, the operating risk associated with the business, the guarantee period, the target country and any counter-security that may be lodged. In addition, a handling fee is charged.