BMF offers credit to builders
31 October 2013The Builders Merchants Federation (BMF) is the first trade association to use the government’s Trade Credit Enterprise Finance Guarantee Scheme which allows independent merchants to offer higher credit limits to customers.
The BMF has negotiated up to £50m of guarantees for the six-month pilot. Additional credit terms agreed during that period can be made available for up to nine months.
The BMF says the scheme will enable builders to take full advantage of increased refurbishment activity stemming from the second phase of the government's Help to Buy scheme.
Under the pilot merchants will be able to extend credit to customers that fall outside their normal risk profile, or have reached their credit limit. The government will guarantee up to 75% of the additional credit, subject to an overall cap of 15% of the merchant's additional credit portfolio. Merchants pay a monthly premium for the period of the credit limit.
“The merchant's role is effectively that of banker to the construction industry already," said BMF managing director John Newcomb. "The arrangement we've made with the government means BMF merchants can be more flexible with customers who don't have a long trading history or sufficient credit."
The BMF scheme has been welcomed by the Federation of Master Builders.
