Media Release from Bob McMullan Minister for Trade

MT126

10 August 1995

CHANGES TO AUSTRADE LOANS OPEN EXPORT DOOR FOR SMALL BUSINESS - McMULLAN

The Minister for Trade, Senator Bob McMullan, said today that changes to the eligibility requirements for Austrade loans should allow many more small and medium sized businesses with innovative projects to establish new - or expand existing - export markets.

Senator McMullan said the Government has lowered the amount of projected earnings required for a company to be eligible for a loan. The new requirements apply to applications received from 1 July 1995.

"Austrade will now provide up-front funding in the form of loans and advances to companies or joint venture consortia who can generate more than $3 million of export earnings over a five year period," Senator McMullan said.

"Previously, exporters needed to achieve projected export earnings of more than $10 million.

"The changes will boost the export endeavours of small business.

"Austrade will provide matching financial support - starting from $150,000 over three years - to enhance the chances of small businesses with innovative products or services finding success as exporters," Senator McMullan said.

Loan funds are provided as a three year interest free loan with repayment schedules starting in the fourth year. The funding supports exporter expenditure on marketing related activities such as travel, promotion, advertising, salaries and office expenses, and domestic costs directly related to export.

A further change to the Austrade loan scheme now permits provision of up to $300,000 to purchase capital equipment which is directly related to an export project. This funding applies to small to medium exporters who can show an innovative approach to export.

"The principle objective of this scheme is to substantially enhance Australia's net foreign exchange earnings by assisting firms to develop export markets," Senator McMullan said.

"We recognise that one of the imperatives of success in expanding a foreign market is for the company to meet cash flow needs so that it can support marketing related expenditure - something which can be particularly difficult for small businesses."

Austrade loans are an attractive alternative for exporters who have difficulty obtaining funding from traditional sources. There are no establishment fees or administration charges, and Austrade generally takes security over a firm's assets when providing assistance. However, this security ranks behind the company's banking security and doesn't interfere with their normal working capital requirements.

"Austrade is very active and very successful in helping exporters secure overseas markets," Senator McMullan said.

"These latest changes to loan eligibility requirements confirm the Government's commitment to meeting the needs of Australia's small and medium-sized export businesses, through Austrade.

"Budget funds for this financial year will provide $55 million in support to approximately 60 firms.

"Our projections show that for every dollar provided by these Austrade loans there will $20 in export earnings generated for Australia."

Parliament House, Canberra, ACT 2600;

Tel: (06) 277 7420

Fax: (06) 273 4128

Further information: Senator McMullan's office: John Flannery, (06) 277 7420 Austrade: Lidija Terzic (02) 390 2356 David Gemmell (02) 390 2729