British tea and coffee supplier Union Papertech has secured government support for its latest expansion into the production of environmentally-friendly tea bags.

The Manchester-based firm has signed a deal with UK Export Finance (UKEF), the UK export credit agency, worth $1 million.

The deal will enable Union Papertech to unlock further growth and finance new exports orders to the US and Europe.

In a press statement, Union Papertech said the deal will also help it to continue developing new biodegradable products as part of the company’s sustainability plans.

UKEF support during the pandemic

In the last 18 months, despite the COVID-19 pandemic, Union Papertech has been able to expand its international business supplying biodegradable filter paper to markets worldwide.

Stephen Todd, finance director at Union Papertech, said: “As with many UK businesses involved in exporting, the pandemic presented a huge challenge for us.

“Fortunately, UKEF support played an instrumental role, allowing us to pursue new export contracts and expand our work in producing biodegradable paper”.

Approximately 50% of Union Papertech’s products are exported to markets in Europe, the US, and other countries worldwide.

Among Union Papertech’s clients are the likes of Tetley, Typhoo, Jacobs Douwe Egberts, and Celestial Seasoning.

However, when the COVID-19 pandemic hit, Union Papertech struggled with tough shipping conditions, as container freight rates surged and credit lines tightened.

This led to the company seeking support from UKEF, and taking advantage of its General Export Facility (GEF) aimed at helping UK businesses access funding to cover the costs of international trade.

Specifically, UKEF provided Union Papertech with a GEF facility worth $1 million (£720,000), of which $800,000 (£576,000) was guaranteed, with the rest provided by the UK’s NatWest bank.

The GEF support will give the company more financial flexibility, to expand this offering as demand increases outside of the UK market.

Greener tea bags

Union Papertech has begun developing more sustainable coffee and teabag paper, replacing the polypropylene with a greener, more environmentally friendly alternative, and continues to export its products around the world.

Since signing with UKEF, the company has won two further contracts in India with a combined value of $1 million per year.

Andy Mannix, export finance manager at UKEF, said: “UKEF’s mission is to enable and empower British companies to realise their exporting potential.

“Increasingly, this mission is focused on empowering businesses that can make a difference with sustainable goods.

“It has been a tough year for British business, especially those in food and beverage like Union Papertech. In such unpredictable times, I’m delighted that we could provide the necessary support.”