Businesses that are facing cuts in the level of available credit insurance cover can begin to make use of a new government support scheme from 1 May.
As announced in the Budget, the government’s trade credit insurance scheme is to provide up to £5 billion of additional insurance to businesses that have suffered reductions in their level of cover.
Under the government scheme, which is to run from 1 May until 31 December this year, UK businesses will be able to purchase six months’ ‘top-up’ insurance from the government if credit limits on their UK customers are reduced. The qualifying window will be backdated to include any reductions since 1 April 2009.
Businesses can buy the government-backed insurance to restore cover to the original level or double the amount they are able to obtain from the private sector up to the value of £1 million, whichever is the lower.
The scheme was set up in response to worries among firms that cuts in the value of insurance cover has been pressurising suppliers into shortening their payment terms and putting extra strain on business cashflows.
Lord Mandelson, the Business Secretary, said: “The government’s Trade Credit Insurance top-up scheme provides a lifeline for businesses to help them address the specific challenges that they are facing as a result of the reduction in trade credit insurance.
“This scheme is a targeted transitional measure to help companies secure the cash flow they need and restore confidence throughout supply chains. Risk is shared between government and the private sector, striking the right balance between supporting businesses and protecting taxpayers’ money.”
Businesses that wish to apply for the scheme should contact their trade credit insurer, the Department of Business has advised.
