Support of SMEs
Small and medium-sized enterprises (SMEs) represent a significant customer base for EGAP and support of their export activities belongs among priorities of the insurance company.
With regard to international rules for state supported exports restricting sphere of activity of state export credit insurance companies only to that part of the market which is not covered by commercial credit insurers, the focus of SMEs support on EGAP's part lies primarily in the area of pre-export financing and in bank guarantees issued in relation with export contracts.
Among decisive factors without which it is often impossible to strive for an export contract belongs swiftness of processing of a credit for financing of the production for export or of guarantees, and EGAP therefore offers to the SMEs in cooperation with several banks a substantially simplified administrative procedure in insurance of:
- credits for pre-export financing of the production for export or for financing of an investment in the production for export,
- bank guarantees for obligations of an exporter in relation to terms and conditions of winning or fulfilment of an export contract.
The agreement with banks unifies rating of the exporters, i.e. process of analysing and assessment of the risk level of companies applying for a pre-export credit or bank guarantee. Unlike current practice, EGAP does not examine creditworthiness of a client but it assumes the rating prepared by a bank and, provided it is in a predetermined limit, insures the pre-export credit or bank guarantee automatically. The time necessary for processing of an insurance policy is shortened to an indispensable minimum and the exporter saves time and money because the insurance premium is lowered by a part of costs expended by the exporter on an entry audit of the export contract by an independent inspection company and the insurance premium as well as self-retention decrease after the first loss-free business transaction. EGAP has been offering the simplified way of insurance of the pre-export financing and of bank guarantees in cooperation with the following banks:
EGAP cooperates with the Czech Export Bank and with the Czech-Moravian Guarantee and Development Bank and with commercial banks on the product specially designated for the small and medium-sized enterprises which are producers and suppliers of sub-deliveries for larger exporters. This product makes use of synergic effect of mutual cooperation when state institutions validate reliability and creditworthiness of a sub-supplier from the category SME and in this way substantially reduce risks of commercial banks in financing of the production for export.
Regarding insurance of the risk of the non-payment of an invoice for delivered goods and servicesy, it depends on maturity and country of the buyer. Payment deferral of up to 2 years in a marketable risk country (e.g. all EU and OECD countries) is insured in a standard way by commercial credit insurance companies, among others by the KUPEG Credit Insurance, a subsidiary of EGAP.
EGAP offers for other cases insurance of a short-term export supplier credit ("B") and when an exporter intends to sell short-term export receivables to a bank before their maturity, insurance of a short-term export supplier credit financed by a bank ("Bf") can be used.
EGAP's insurance products are intended for all exporters of Czech goods and services regardless of their size, legal form and volume of export. Clients from among the small and medium-sized enterprises may thus utilize the whole range of state-supported insurance provided the basic conditions are fulfilled:
- an applicant for insurance is registered as a taxable entity in the Czech Republic,
- the Czech share in the total export is minimum 50 % (more can be found here),
- export related risks are non-marketable.