An awareness of EKN, and a willingness to use EKN’s guarantees, is increasing among small and medium-sized enterprises. Companies using EKN represent exports both within and outside the OECD, and can be found in many different industries.

More and more small companies are looking for ways into the international market. Even if the major part of their exports is going to nearby countries in Northern and Western Europe, it is exports to countries outside the OECD area that are growing the fastest. During the year, EKN received many applications from small companies for exports to Central and Eastern Europe. There has also been greater demand for risk cover for deliveries to the Middle East, above all to Iran. For many small companies, the EKN guarantee has been a pre-requisite for being able to complete the transactions.

When the private sector’s willingness to take risks for specific countries is low, and the scope for risk cover is limited, this mainly affects the smallest companies. It is here that EKN can be of great benefit for companies who would otherwise have very few opportunities to find risk cover for their deliveries. These are the companies responsible for the growth in Swedish exports.

EKN’s Business Area for SMEs looks after companies whose turnover is below SEK 1 billion, with fewer than 500 employees. Most of EKN’s customers in this segment are small rather than medium-sized companies.

Industries

During the year, small and medium-size enterprises from very different industries made use of EKN’s services. They range from producers of raw materials and components manufacturers, with transactions with short credit periods, to companies who construct major power stations, with credit periods extending over several years.

Risk-sharing with banks

As well as the guarantees issued directly to exporting companies in order to limit the risks of non-payment, EKN also issues guarantees to banks to reduce their risks vis-à-vis Swedish exporting companies. The working capital guarantee means that EKN takes on half the bank’s credit risk without security. This increases the chances for companies to get access to working capital. Similarly, EKN’s counter guarantee can cover a large part of the risk for the contract guarantees that the bank issues. This in turn increases the bank’s capacity to issue further contract guarantees in export transactions. In EKN’s exposure, these risk undertakings for Swedish exporting companies are recorded in the accounts as guarantees issued in relation to Sweden. The table below shows that in volume terms, the highest demand in 2007 for small and medium-size enterprises was for these guarantees.

Increased awareness of EKN

Previous market surveys have shown a low awareness about EKN and its guarantees. For that reason, we carried out a nationwide marketing initiative during the year, focusing on export seminars at many locations throughout the country. In all, some 9,000 companies, 1,700 local bank branches, and a few hundred export promoters from all Sweden’s counties have received information packs and invitations. The initiative also included advertising in the local press and telemarketing. In all, there were 45 seminars, run in close collaboration with ALMI and the Swedish Trade Council’s regional exporting consultants. To summarise, this means that during 2007 we made contact with 1,500 exporters who confirmed that they were interested in EKN. About 150 of them wanted to be contacted in person by EKN for further information. The follow-up work to process these contacts is continuing in 2008. Using electronic newsletters, we have kept continuously in touch with all 1,500 companies.

New customers

In all, we obtained 99 new customers during 2007, most of them SMEs. This can be seen as a result of the market initiatives that started in 2006 and were further intensified during 2007.

• 2004 – 32 new customers
• 2005 – 33 new customers
• 2006 – 74 new customers
• 2007 – 99 new customers

Of the 74 new customers in 2006, more than 50 percent have come back to us for further guarantees.

Collaboration with other export promoters

The collaboration initiated earlier with ALMI has developed further, and now all the 20 regional ALMI companies around the country can arrange EKN counter guarantees and working capital guarantees. This collaboration is strategically important for EKN in its marketing efforts towards SMEs. Thanks to ALMI’s regional presence, we are able to reach out to them.

During the year, EKN has continued to develop its collaboration with other export promoters. Together with ALMI, SEK, the Swedish Export Credit Corporation, the Swedish Trade Council and Swedfund, a new product for small and medium-sized enterprises has been produced – the Export loan. A lack of financing can inhibit smaller companies from taking on bigger transactions. For this reason it is important to develop new supplementary forms of financing alongside what the banking system already has to offer. ALMI, which works in close regional cooperation with small companies, will be handling the loans. SEK and EKN will jointly supply the capital and risk management. The Swedish Trade Council and Swedfund will assist with marketing. Initially, SEK and EKN have set up a credit framework of Swedish kronor 500 million for the Export loan.

As well as the marketing activities mentioned above, EKN participated during the year in several country seminars and other meetings where banks have invited their customers.

Guarantees for SMEs

The guarantees that SMEs prefer to use are short-term loss on claim guarantee, basic guarantee, counter guarantee and working capital guarantee.

The guarantees can be used for various types of risks during the entire business process, from early negotiations until the final payment, and until the guarantee period for the goods/services has expired. Demand has remained high for all the guarantees, including the relatively new working capital credit guarantee that eases the companies’ provision of capital.

The basic guarantee gives protection against losses on accounts receivable for transactions with a credit period not exceeding 6 months. Compensation is paid by EKN in SEK, EUR or USD depending on the contract currency.

The short loss on claim guarantee gives protection against losses on accounts receivable for transactions with a credit period not exceeding 12 months. Compensation is paid by EKN in SEK.

Neither the basic guarantee nor the short loss on claim guarantee can be used for transactions to Australia, Canada, countries in the EU, Iceland, Japan, Norway, New Zealand, Switzerland or the US, because of EU competition rules.

The counter guarantee protects issuers (usually the exporter’s bank) of contract guarantees (such as the advance payment guarantee) against losses when the beneficiary (usually the purchaser) makes use of the contract guarantee. The counter guarantee increases the bank’s capacity to issue new contract guarantees and credits for the benefit of the customer, thus facilitating further export transactions.

The working capital guarantee reduces the bank’s risk vis-à-vis the borrower, and increases the capacity for fresh credits. The working capital guarantee eases the provision of capital for SMEs. With a working capital guarantee, the bank shares the risk with EKN when offering working capital or loans, or granting overdraft facilities.

Exports

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