The Treasury has announced a £1.25bn package of support for start-up and tech businesses impacted by COVID-19 through two new facilities.
Firstly, the £500m Future Fund will launch in May and be delivered in partnership with the British Business Bank. The fund will provide government loans ranging between £125,000 and £5 million to UK-based companies subject to at least equal match funding from private investors.
These convertible loans are targeted at businesses that rely on equity investment to fund innovation and growth. Characteristically, the business is loss-making with a heavy cash burn rate leaving it outside the lending benchmarks adopted by banks under Coronavirus Business Interruption Loan Scheme.
There are three initial eligibility criteria:
- the business is based in the UK;
- the business can attract the equivalent match funding from third party private investors and institutions; and
- the business has previously raised at least £250,000 in equity investment from third party investors in the last five years.
Further details about this scheme will be published in due course but the headline terms can be found here .
Secondly, a new tranche of £750m of R&D loans and grants will be made available through Innovate UK. This is aimed primarily to accelerate and expand support to the 2,500 existing start-up customers. However, new support will be available to around 1,200 businesses not already in in receipt of Innovate UK funding.
The Chancellor, Rishi Sunak, stated “Britain is a global leader when it comes to innovation. Our start-ups and businesses driving research and development are one of our great economic strengths and will help power our growth out of the coronavirus crisis.”
We will continue to report any developments as they come through. In the meantime, please email email@example.com if you have any questions or would like any other information.