Start-ups prepare for Future Fund launch
19 May 2020: from tomorrow, start-up businesses not eligible for existing coronavirus rescue measures will be able to access government loans via the new Future Fund scheme.
Announced by the Chancellor in April, the Future Fund will offer government loans to UK-incorporated companies ranging from £125,000 to £5m, provided private investors at least match the funding provided by the state.
Badged as a package for innovative early stage companies not eligible for existing coronavirus support, the fund will match up to £250m of private investment – although on Monday the Chancellor told MPs that he would be “more than happy” to increase the funding available should the scheme prove popular.
The Future Fund will be administered by the British Business Bank (BBB), and the state-owned group released final guidance for the fund on Monday which is available here. ICAEW has also put together information on the Future Fund, which can be accessed here.
Under the scheme’s terms, companies will be able to apply for match-funding of between £125,000 and £5m. The loans can then be repaid or converted into discounted equity if they are not – making the government a direct shareholder in UK start-ups should the latter occur.
There is no requirement to value the company, and when companies and investors have completed an application through the BBB portal, they should receive funds in an estimated two weeks.
According to the government’s guidance, a business is eligible for the Future Fund if:
- It is UK-incorporated. If the business is part of a corporate group, only the parent company is eligible.
- It has raised at least £250,000 in equity investment from third-party investors in the last five years.
- None of its shares are traded on a regulated market, multilateral trading facility or other listing venue.
- It was incorporated on or before 31 December 2019.
- At least one of the following is true: half or more employees are UK-based and/or; half or more revenues are from UK sales.
The fund is currently due to run until at least the end of September.
To read ICAEW’s guidance on the Future Fund click here.