The government will back the credit insurance industry with a £10bn package that has been praised by some of the largest credit insurers in the channel.
The scheme will be available till the end of the year and is back dated to 1 April with a review scheduled for September to assess whether it will need to be extended.
Three of the largest credit insurers - Euler Hermes, Atradius and Coface - have praised the move.
Euler Hermes' UK managing director Milo Bogaerts said: "Through this landmark agreement the public and private sectors are joining forces to support ‘UK plc' by maintaining liquidity and confidence in the intercompany trade credit market.
"This will help our customers through this difficult period, help them to remain competitive, and allow them to take every opportunity to restart trading with confidence as the UK economy emerges from lockdown."
The government had been under pressure to pull a package together after countries around Europe took similar steps.
Atradius backed the government's move in a note to brokers, seen by CRN.
However it said that the government's support doesn't mean it will automatically reinstate cover that has been reduced or removed, and warned that the scheme is not a remedy for poor credit.
"The launch of the Scheme follows weeks of intensive discussions between the insurance industry, ably supported by the ABI and the Government," the note stated.
"Atradius has been fully engaged in these discussions to achieve a scheme that will operate effectively for the industry and most importantly for insured customers.
"Regrettably there are many firms that won't survive this crisis, and part of our role is to protect customers from exposure to debts that we already know will not be recovered.
"Welcome as it, the Government scheme is not a panacea to poor risk and we will continue to review all limits to ensure that exposure is managed in a proactive, positive and professional way, in line with the Government Scheme."
Fellow insurer Coface also praised the government in a similar message to brokers.
"This scheme reflects similar state-backed support, currently being developed in other European countries and Canada, to help businesses to continue to benefit from protection," it said.
"A key component of the scheme is to maintain, subject to normal underwriting practices, credit limits on buyers that are temporarily affected by the Covid-19 crisis and whose solvency would otherwise not be questioned."
Trade Credit Insurance underwrites an estimated £350bn of economic activity of more than 630,000 businesses in the UK each year, according to government figures.
Business secretary of state Alok Sharma said: Trade credit insurance is a daily necessity for hundreds of thousands of businesses across the UK - particularly those in non-service sectors such as the manufacturing and construction sectors.
"Our £10bn guarantee gives peace of mind to businesses, allowing them to continue to trade and maintaining liquidity in supply chains. This reinsurance scheme is an important step as we carefully set about firing up our economy as we emerge from the pandemic."
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