Credit Insurance Scheme backdated to October 2008
Businesses which have had their trade credit insurance cover reduced since October last year can now purchase government-backed top-up insurance, after the Government bowed to pressure from business groups to extend the scheme.
Previously, support was only available to businesses which had their credit insurance cover reduced from 31st March 2009 onwards, but businesses which were left without sufficient cover from 1st October 2008 can now apply.
Launched in May this year, the Government’s £5 billion credit insurance top-up scheme is designed to counteract the effect of insurers reducing or withdrawing credit insurance from small suppliers during the recession.
The trade credit insurance top-up scheme enables businesses to purchase government-backed top-up insurance, to protect against the risk of default on payment. Firms can either restore cover to the original level or increase the amount they are able to obtain from the private sector, up to the value of £1 million. The scheme is due to run until 31st December this year.
After discussions with business groups, who were concerned that eligibility to the scheme was too limited, the Government agreed to extend it.
“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.”
The British Chambers of Commerce welcomed the decision to extend the scheme. BCC director general David Frost said:
“The extension of the scheme is necessary, as problems surrounding credit insurance cover became apparent in late 2008.”
“For it to be a success, however, the availability of the Government’s intervention needs to be communicated swiftly and efficiently to the businesses that have been affected.”
Credit insurance provider HCC has announced it will join, with immediate effect, the three largest credit insurers – Euler Hermes, Atradius and Coface – as a provider of the Government scheme.
For more information visit the Business Link website to learn about the trade credit insurance top-up scheme.