Government boosts trade credit insurance scheme

The Government is to extend its trade credit insurance top-up scheme, in a move welcomed by business groups.

Launched on 1 May, the scheme was designed to protect the suppliers of small-to-medium-sized businesses against the risk that they might not get paid by their customers. It offered six months' worth of top-up cover to firms that had seen their trade credit insurance reduced since April 2009.

But after lobbying by business groups, Business Secretary Peter Mandelson yesterday announced that the top-up is to be backdated, and will be available to suppliers that have had their insurance reduced at any time since 1 October last year.

He also revealed that credit insurance company HCC will join Euler Hermes, Atradius and Coface as a provider of the scheme.

The extension has been widely welcomed by business groups.

Richard Lambert from the Confederation of British Industry said: "Restoring confidence is critical to improving the economy, and this gives companies more certainty about their ability to trade."

And David Frost of the British Chambers of Commerce commented: "The extension of the scheme is necessary, as problems surrounding credit insurance cover became apparent in late 2008.

However, he warned that for the extension to be a success, "the availability of the government’s intervention needs to be communicated swiftly and efficiently to the businesses that have been affected."

The scheme will be available until the end of the year.

IMAGE: AP Photo/Lefteris Pitarakis