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‘Stock guarantee scheme could help the retail sector’

Given the difficulty SMEs have in accessing finance, complaining about the credit available to purchase stock seems to be a common pastime for retailers and suppliers.

Given the difficulty SMEs have in accessing finance, complaining about the credit available to purchase stock seems to be a common pastime for retailers and suppliers. Trading relationships, developed over years, are being tested by the current economic climate. The risk to a supplier of not getting paid for its product has increased as prospects for the high street worsen.

The Government’s NewBuy Scheme, which offers first-time buyers help in getting a mortgage for new-build properties and gives the construction industry a boost, looks to be an albeit relatively limited way of unblocking inequalities in supply and demand. Might it be replicated in the retail sector so that indies get assistance in creating jobs and growing and developing?

While no one would ask for a blank cheque, a limited amount of support to those meeting specific size and performance employment criteria could be a novel way of assisting the sector. 

A ‘retail stock guarantee’, providing a supplier with a secured repayment amount of say 15% to 20% should the retailer default or go into insolvency, could provide the funding bridge to restore some confidence and unblock barriers to trading.

  • Marc Fecher, Corporate finance partner at accountancy firm Kingston Smith

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