By Daniel Hunter

A pilot scheme launched two months ago to help small businesses and sole traders secure credit has already helped 200 firms.

Aimed initially at the trade users of the Kingfisher group of stores — Screwfix and B&Q’s Tradepoint — the scheme has so far enabled small firms to secure credit of £500,000, with more trade customers in the pipeline to use the scheme.

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.

There has been a wide range of interest in the pilot trade credit scheme from across a range of businesses sectors. Negotiations are 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."

Ian Cheshire, Group Chief Executive of Kingfisher plc, 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 per cent 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 will be 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 the Business Minister visited a B&Q store in Gillingham, Kent to hear first hand from Kingfisher staff about its success to date.

Ahead of the industrial strategy for construction being published in the summer, Mr Fallon also visited construction products manufacturer Polypipe in Aylesford. Whilst there he was given a tour of the factory and shown the investments they had made as part of winning work for the London 2012 Olympics.

Join us on
Follow @freshbusiness