Government extends trade credit insurance scheme
The government has responded to businesses' calls to extend the trade credit insurance top-up scheme
A £5bn scheme enabling firms to top-up trade insurance if their cover has been reduced has been extended to more businesses, it was announced today.
Under the scheme launched on May 1, businesses that have found their credit insurance reduced since April 2009 as a result of the recession have been able to purchase six months’ top-up cover.
From today, businesses which have had their cover slashed since October 1 2008 will also be eligible to top-up their cover, the government said.
“This extension will give more small and medium sized businesses flexibility to respond to a reduction in their credit insurance cover,” said business secretary Lord Mandelson.
“We are acting decisively to help more businesses and allow them the breathing space to adjust their business models in response to the current climate.”
Business lobby groups today welcomed the move. Richard Lambert, CBI director general, said: “This change, which the CBI called for, gives more help to those businesses left vulnerable without sufficient trade credit insurance cover since this autumn.
“Restoring confidence is critical to improving the economy, and this gives companies more certainty about their ability to trade.”
Trade credit insurers provide suppliers with insurance against the risk of a customer defaulting on the payment of their goods or services.
Suppliers can purchase government-backed insurance to either restore their cover to its previous level or double the amount they can obtain from the private sector, up to the value of £1m.
The news was delivered by the newly formed Department for Business Innovation and Skills (BIS), a merger of the Department for Business, Enterprise and Regulatory Reform and the Department for Innovation, University and Skills.
© Crimson Business Ltd. 2009