- Temporary guarantee will help those experiencing difficulties during COVID-19
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The Government has announced a Trade Credit Insurance (TCI) guarantee to help businesses trade with confidence during the COVID-19 crisis.
Businesses with supply chains that rely on TCI will most benefit from the new scheme, which aims to help those who are experiencing difficulties maintaining cover during coronavirus.
TCI covers hundreds of thousands of business-to-business transactions by insuring suppliers selling goods against the company they are selling to from defaulting on payment. But with businesses struggling to pay bills amidst the coronavirus pandemic, companies risk having credit insurance withdrawn, or having premiums increased to unaffordable levels.
The Government’s guarantee, which was announced by Economic Secretary to the Treasury, John Glen, means a temporary assurance that business-to-business transactions will be supported and maintained across the market, helping to hold up supply chains and allow businesses to trade with confidence. The Government is said to be working with businesses and the industry on full details of the plan in order to ensure that risk is appropriately shared between the Government and insurers.
“This country’s businesses are crucial in helping us to kick-start the economy as we get back to work,” John Glen said. “By guaranteeing business-to-business transactions currently supported by TCI, we will help to maintain a vital cog in our economy.
“This is on top of an unprecedented package of support we have put in place to help protect individuals, businesses and the economy.”
Speaking about the temporary scheme, Ian Wright CBE, Food and Drink Federation chief executive, said: “We are delighted that the Government has introduced a guarantee scheme for TCI. It’s news that will be warmly welcomed by food and drink manufacturers of all sizes, and an intervention we have been calling on the Government to introduce since lockdown first began. We look forward to working with the Treasury on the details.”
The temporary guarantee covers COVID-19 economic challenges, and will provisionally last until the end of 2020, when a review of the TCI market will take place to ensure it can continue to support businesses in the future.
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