Some 200 small building firms and sole traders have so far take advantage of the scheme introduced two months ago to help them get credit.
Aimed initially at trade users of Screwfix and B&Q Tradepoint, the scheme has enabled small firms to secure credit of £500,000 to date, with more trade customers in the pipeline to use the scheme.
As previously reported here, this alternative type of finance has been made available using an extension to the government’s Enterprise Finance Guarantee scheme. The aim of the pilot scheme is to make credit more widely available to those viable businesses in the construction industry who struggle to secure the support needed to meet the upfront cost of materials.
The Department for Business, Innovation & Skills (BIS) said that there had been a wide range of interest in the pilot trade credit scheme from across a range of businesses sectors. Negotiations are under way with more builders merchants to wident he scope of the scheme. A model is also being developed that would pave the way for smaller businesses to participate through their trade association.
Business minister Michael Fallon said: “The success of the pilot scheme is encouraging so far, and rolling it out amongst other builders merchants nationally and locally will boost confidence among our smallest traders in the construction industry."
Screwfix and B&Q are both part of the Kingfisher group, whose chief executive Ian Cheshire said: “The pilot is showing encouraging signs that trade customers of Screwfix and B&Q’s TradePoint are making good use of the extra credit available to them through the Enterprise Finance Guarantee scheme. Smaller business such as these will be a vital engine of economic growth for the UK so I’m pleased that we’re able to support that.”
The pilot ensures that businesses that would have previously been turned away for credit by Kingfisher because of a lack of credit history or track record can now be helped. The risk is shared by providing government guarantees of 75% on individual trade credit facilities. As well as allowing Kingfisher to provide credit to viable businesses outside its present risk profile, the scheme also allows it to increase credit limits for certain existing businesses.
The scheme has been designed so there is no new administrative burden to Kingfisher. All credit decisions are made by Kingfisher based on existing processes, and customers and frontline staff will see no difference to the trade credit application.
The update on the scheme came as Mr Fallon visited a B&Q store in Gillingham, Kent to hear how the scheme was working out so far.
He also visited construction products manufacturer Polypipe in nearby Aylesford.