Government Extends Trade Credit Insurance Scheme
Small businesses are set to benefit from changes to the Government’s £5 billion trade credit insurance top-up scheme, which aims to help firms protect themselves against defaulted payments during the recession.
Launched in May this year, the top-up scheme is designed to counteract the effect of insurers reducing or withdrawing credit insurance from small suppliers during the recession.
The initiative enables businesses to buy government-backed top-up insurance. Firms can either restore cover to the original level or increase the amount they are able to obtain from the private sector. Four credit insurers – Euler Hermes, Atradius, Coface and HCC– are offering the scheme to eligible businesses.
Following Government changes to the scheme, the £20,000 lower limit on top-up cover has been removed, meaning more small businesses will be eligible, the upper limit on top-up cover has been increased from £1 million to £2 million, and premiums payable to the Government have been reduced from 2 per cent to 1 per cent.
British Chambers of Commerce (BCC) economic adviser, Steve Hughes, said the changes would help small firms, but stressed the importance of making businesses aware of the scheme and its new criteria.
“The Government’s top-up scheme was initially slow off the mark in addressing the problems encountered by those businesses that had had their policies affected before April 2009, but the changes to the scheme should encourage more businesses to use it,” he said.
“However, it’s important that users of trade credit insurance are made aware, firstly, that the scheme exists, and secondly that its conditions have changed,” added Hughes.
The top-up scheme is due to run until 31 December. Firms can buy up to six months’ of cover up until the end of December.
For more information about credit insurance, visit the Business Link website www.businesslink.co.uk/creditinsurance