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.
Each participating member can provide new credit facilities under the scheme until 31st March 2015, and these will remain in place for a further 12 months until 31 March 2016.
The scheme, which gives approved companies access to up to £50m of government-backed guarantees, allows BMF merchants to extend more credit to new and existing customers.
John Newcomb, BMF MD said: “This is a risk-free way to grow business and take advantage of the upturn in the market. It has already helped many BMF merchants to take on a lot more business by extending additional credit to customers across the board, from large contractors down to those needing just a few thousand pounds.
“The scheme is still in its pilot phase, but the government is shortly due to make its decision as to whether we can continue to use it. The whole industry needs to get behind this initiative and demonstrate that is helping merchants and their customers grow their business.”
At least three new BMF merchants, including W J Lewis, have successfully applied to join the scheme since the extension was announced, which coincided with the presentation by Judith Ozcan, the senior director of the British Business Bank responsible for the Trade Credit Finance Scheme, at the trade association’s Members Day in September.
Jon Moore of W J Lewis said: “We are actively looking for new business opportunities but are sometimes held back if we are unsure of a contractor’s business. The great thing about this scheme is its flexibility. We can use it selectively if we are unsure of a contractor’s status, but it’s not like an insurance policy that you have to use with all customers.
“We will be using it to trade with contractors with whom we would not normally trade, and I would encourage others to give this serious consideration now. The BMF has negotiated a truly commercial business benefit for members and we’d be remiss not to make the most of it over the next two to five years. The more merchants who come on board now, the longer this scheme will last.”
Another recent adopter, Parker Building Supplies, believes it will help them expand their business.
Parker’s financial and commercial director, Stewart Pierce said: “This is a great initiative giving smaller merchants the opportunity to compete for work that ordinarily they would have to leave alone. The key to ensuring it works well for all parties is making sure that customers are trading with us to the level of their increased credit limit.”