In April, the Chancellor, Rishi Sunak, announced a £1.25 billion support package targeted to help protect businesses driving research and development that have been hit by the Coronavirus.
The £1.25bn includes a £500 million investment fund for high-growth firms called the Future Fund and £750 million of targeted grants and loans for small and medium sized businesses focusing on innovation and development, so they can continue to develop innovative new products and help increase UK growth.
The Future Fund, launched on 20 May and will be open until the end of September. It aims to support start-up businesses not eligible for other COVID-19 rescue measures and offers government loans of between £125,000 and £5 million to UK-incorporated companies, provided private investors at least match the funding supplied by the state.
To be eligible for the Future Fund, businesses must be an unlisted UK registered company that have raised at least £250,000 in 3rd party equity investment in the last five years. The government will provide loans of between £125,000 and £5 million, with private investors at least matching them. These loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid.
The Future Fund is administered by the government-backed British Business Bank (BBB). The loans can be repaid or converted into shares in the Investee Company in a variety of circumstances, including fundraisings, exit events and upon the maturity of the loans.
The £750 million of targeted support for small and medium size firms will be available through Innovate UK’s grants and loan scheme from mid-May. Up to £200 million of grant and loan payments will be accelerated for its 2,500 existing customers on an opt-in basis. An extra £550 million will also be made available to increase support for existing customers and £175,000 of support will be available to 1,200 firms not currently in receipt of Innovate UK funding.
Read more about the support package on the government’s website.