Following an early review, the government has agreed to extend the Trade Credit Enterprise Finance Guarantee pilot scheme, which the Builders Merchants Federation (BMF) has made available to its members.
The BMF secured up to £50million of government-backed guarantees for a six month pilot launched last autumn and due to end in March. The extension means that approved BMF members may continue to grant new credit facilities until the end of September 2014, and those facilities can remain in place for a full 12 months.
The BMF was the first trade association to launch an initiative using the government-backed trade credit scheme, thereby securing additional finance for independent builders merchants and their customers.
To date, 26 BMF merchants have qualified to participate in the scheme or are in the process of being approved. Securing an extension to the scheme will make it possible for many more BMF merchants to participate.
BMF managing director, John Newcomb said: “It’s extremely good news that the scheme has been extended, effectively until September 2015. It has already attracted a lot of interest from BMF merchants and now there is plenty of time to take full advantage of the credit guarantees provided. We have received applications from a wide range of companies, from those with a turnover in the tens of millions, to those turning over less that a million a year. If you have been considering applying but haven’t yet done so, now is the time to go for it.”
LBS Builders Merchants, which operates 16 branches in South West Wales, was one of the first to submit an application to extend credit to new and existing customers.
LBS’ financial director, Philip Evans says: “Our customers range from major contractors to sole traders. In recent years it has been more and more difficult to get trade credit cover for all the customers we want to insure. If we can’t get cover, we will only trade at a certain level as it’s 100% our risk if anything goes wrong.
“The BMF scheme allows us to extend more credit to new and existing customers safe in the knowledge that it is partially underwritten. It comes at a cost, as we have to pay a fee to the government for each credit facility, but we believe that the extra business generated should far outweigh that cost.
“It’s good for us and will enable some of our customers to expand their business too. Some have a number of projects in the pipeline but the lack of funding means they have been doing them one at a time. The extra credit facility may mean they can run two or more projects concurrently, which is good for the local economy.”