The scheme is called the Future Fund Launching in May 2020 and will provide convertible government loans to UK-registered companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors. Announced by the Chancellor of the Exchequer, the fund will be delivered in partnership with the British Business Bank and will run until at least the end of September 2020.The UK government will initially make up to £250 million available in total and keep this amount under review.
Badged by the government as “unsecured bridge funding available alongside other private third-party matched investors,” the government’s loan will constitute no more than 50% of the bridge funding being provided to the company, with the remaining amount provided by matched investors.
Full eligibility criteria are still to be published, but according to the government webpage on the scheme firms will be eligible if:
- your business is based in the UK and be an unlisted UK registered company;
- your business can attract the equivalent match funding from third party private investors and institutions;
- your business has previously raised at least £250,000 in equity investment from third party investors in the last five years;
- the company must have a substantive economic presence in the UK;
- if the company is a member of a corporate group, only the ultimate parent company (if it is a UK-registered company) will be eligible to receive the loan;
- an eligible company shall also be subject to customer fraud, money laundering and KYC checks prior to any loan being made.
There are conditions attached in relation to conversion terms and interest on the loan which can be read on the attached pdf document Convertible Loan Key Terms.
The government will also provide further assistance in the form of £750m of grants and loans from Innovate UK, the country’s government research and development support agency. Funds will predominantly be available to Innovate UK’s 2,500 existing customers, and the first payments will be made in mid-May.
Rishi Sunak, the UK Chancellor, told a press briefing at the launch “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,”
“This new, world-leading fund will mean they can access the capital they need at this difficult time, ensuring dynamic, fast-growing firms across all sectors will be able to continue to create new ideas and spread prosperity.”
The UK is very keen on promoting new innovative businesses and sees this very much as a major contributor to the future UK economy and this Fund is there to help these start up companies through the financial difficulties caused by covid 19 and realise their ambitions.
