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Cut price trade credit insurance designed specifically for small businesses was launched by a leading insurance broker.

Fresh product of half the premium annual typical covers up to ￡ 350 000 to the turnover of the risk that a customer becomes insolvent and cannot pay.

Towergate, managed by the entrepreneur Peter Cullum, estimates that up to one million small businesses could benefit.

Coverage is underwritten by the giant Atradius credit insurance and to begin with will be available in all areas except for the construction and clothing.

Gavin McClaren, Divisional Director of the Towergate credit, said: "at the time of a traditional credit insurance premium would begin to ￡ 3,000 and go upwards for a small business is a price too élevé.normalement coupled with a high demand for ￡ 500 to 1,000 ￡ excess."

"Our product is a premium of ￡ 1,870 per year and an excess of ￡ 250.That opens a much larger portion of accounting to cover.?

Policy of the Towergate tackles concerns business credit insurers withdraw coverage on a large customer in the recession without a notice or proof of payment with some providers; behaviour change

This is letting companies self-police policies and cannot withdraw coverage on a particular company without any direct proof that there was a change of behaviour affecting the lessee direct payment.

Small businesses must notify the Towergate if a customer pays no later than 30 days beyond the terms of contract agreed during the last six months or risk coverage is invalidated.

M. McClaren said: "it is an important step for the assurances.Ils industry give the holder of the politique.Ils surveillance have no control over what they cover and that they are not."

Policy does not have any insurer approved credit limit but with a maximum liability of ￡ 20,000 an application annually and a maximum of ￡ 10,000.

M. McClaren said: "the impact of a bad debt on a small business can be massive.Si you have a profit margin of 10pc and maintain a bad ￡ 10,000 debt, which means that you would achieve a further ￡ 100,000 sales just for standstill."

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