We recently blogged on the Chancellor of the Exchequer's trade credit insurance top-up scheme (the Scheme) announced in the 2009 Budget (see our previous blog on the terms of the Scheme by clicking here).
Currently 14,000 UK companies buy trade credit insurance against supplies to over 250,000 UK businesses as a guarantee that their bills will be paid. A reduction in credit insurance limits is increasing the pressures on firms causing an abrupt disruption of supply to cash flow, and tending to reduce the level of trade.
Following pressure from businesses and industry leaders, on 9 June 2009, the Government announced that it has agreed to backdate the Scheme by six months, so that eligibility for the Scheme will include those suppliers who have seen their cover reduced since 1 October 2008.
So far, only 13 applications have been accepted under the Scheme providing a total of £718,000 in cover, against a cap under the Scheme of £5 billion. Current providers under the Scheme include Atradius Credit Insurance N.V, Coface S.A, Euler Hermes UK Plc, and HCC International Insurance Company Plc.
Despite the relatively low amount of cover currently provided under the Scheme, Lord Mandelson, the UK's Business Secretary, said that "the extension will give small and medium-sized businesses flexibility to respond to a reduction in their capital insurance cover. 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."