Construction is one of the largest users of trade credit insurance accounting for 30% of the UK market.

Due to COVID-19 and firms struggling to pay bills, businesses have faced the risk of credit insurance being withdrawn, or premiums soaring to unaffordable levels.

The Government’s new Trade Credit Reinsurance scheme, which will apply to the end of the year, will see the vast majority of trade credit insurance coverage maintained across the country.

Businesses will not need to apply directly to this scheme, as support will be administered directly between the Government and insurers.

Andy Mitchell CBE, co-Chair of the Construction Leadership Council, said: “Trade credit insurance plays a significant role in construction, giving businesses the confidence to trade with one another.

“Our Industry Recovery Plan seeks to provide the construction industry with the tools and support they need to get back to work.

“The launch of this government-backed guarantee to support the provision of trade credit insurance is therefore a welcome announcement.”

Chief Executive of the Builders Merchants Federation and Chair of the Insurance and Surety Working Group for CLC Covid-19 Task Force, John Newcomb said: “Amongst other things, trade credit insurance gives builders’ merchants the confidence to trade freely with SME building firms who largely operate in the residential sector.

“The government-backed guarantee will keep cash flowing through the building materials supply chain and protect thousands of jobs.”