Government launches Future Fund for struggling start-ups
20 April 2020: The government has unveiled a new £1.25bn package designed to ensure that early stage companies receive enough investment to remain viable during the coronavirus crisis.
Launching in May 2020, the Future Fund will provide government loans to UK-registered companies ranging from £125,000 to £5m, 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.
Labelled as a £1.25bn package to support innovative new companies not eligible for existing coronavirus rescue measures, the fund will match up to £250m of private investment and add £750m to an existing loan and grant scheme for smaller firms that focus on research and development.
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 will be published “in due course”, but according to the government webpage on the scheme firms will be eligible if:
- your business is based in the UK
- 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
Further details provided in an accompanying PDF state that 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.
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.“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," Rishi Sunak told a press briefing.
“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.”
For the latest news and guidance on the ongoing impact of COVID-19 for businesses and accountants, visit ICAEW’s dedicated coronavirus hub.