The Enterprise Minister has welcomed the new Trade Credit Scheme launched by the Builders Merchants Federation.
The scheme will provide a welcome credit lifeline to smaller companies in the building trade by enabling them to secure additional credit from their local builders merchant and bypass the need for bank lending.
The timing of the BMF’s participation in the government’s Trade Credit Enterprise Finance Guarantee pilot scheme will enable builders to take full advantage of increased refurbishment activity stemming from the second phase of the government’s Help to Buy scheme, as well as supporting those building new homes.
Matt Hancock MP said: “The level of interest in our pilot scheme from the construction sector has been impressive, and the addition of the Builders Merchants Federation will make it easier for more builders to secure credit.
“Expanding the trade credit pilot with the BMF through a wider cross section of builders’ merchants across the whole country has the potential to make a very significant difference. The building industry is not only important in itself, but also has wider benefits for the rest of the economy.
“Access to finance remains a major issue for builders and small businesses, and that is why we are developing innovative schemes like this, alongside setting up the Business Bank.”
The BMF is the first trade association to launch an initiative using the government-backed pilot scheme, which allows potentially higher credit limits to be offered by independent builders merchants to their customers.
They have negotiated up to £50million of guarantees for a six month pilot that goes live this autumn. Additional credit terms agreed during that period can be made available for up to 9 months.
The aim of the scheme is to make credit more widely available to viable businesses in the construction industry who struggle to secure the support needed to meet the upfront cost of materials. In the last two years, 40% of small and medium sized building firms have found it harder to access credit facilities. This has had a major affect on their business, with over a quarter (27%) saying that their firm’s level of activity had decreased. (Source: Federation of Master Builders 2012 member survey);