The project was initially aimed at the trade users of the Kingfisher group of stores, Screwfix and B&Q’s Tradepoint, and has allowed small firms to secure credit of £500k, with more trade customers in line to use the scheme.
The alternative type of finance has been made available using an extension to the government’s Enterprise Finance Guarantee scheme. The aim of the 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.
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Negotiations are currently underway with nationally and regionally based builders merchants, as well as the development of a model that would pave the way for smaller businesses to participate through their trade association.
Business and Enterprise Minister Michael Fallon said: "Conditions in the construction industry remain challenging, but taking an innovative view of how government support schemes are deployed, such as with EFG and the work with Kingfisher, can make a real difference to the sole traders and smallest firms that struggle to access credit.
"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."
The initiative 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.
(JP/IT)
