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UK businesses driving innovation will receive support through the coronavirus outbreak with a £1.25 billion support package.
The much-anticipated shot-in-the-arm for entrepreneurial businesses includes a £500 million fund for high-growth firms and £750 million of grants and loans for research and development focused activities.
In this blog, we reveal what this intervention involves, why the Government has launched the initiative and how businesses can receive support.
£500 million Future Fund and £750 million of grants and loans among a wave of new policy initiatives announced for start-up financial support
(Updated 3oth June 2020)
On 20th April 2020, we saw the launch of two of the Government’s flagship initiatives to prevent coronavirus from affecting companies. The raft of new schemes will be welcomed by those businesses currently ineligible for existing coronavirus relief schemes, such as the Coronavirus Business Interruption Loan Scheme (CBILS).
What does the intervention involve?
Firstly, Chancellor of the Exchequer Rishi Sunak committed a £1.25 billion support package to high growth firms and those focusing on research and development in dynamic sectors of the economy, such as life sciences, artificial intelligence, big data, and clean energy.
The package includes a £500 million investment fund for high-growth companies, the government providing £250 million and private investors matching the Government’s commitment.
Entrepreneurial research and development businesses will also benefit from £750 million of grants and loans. More broadly, the launch of the package sees the creation of new funds to support affected and eligible businesses.
Aptly named, the £500 million Future Fund has been designed to ensure high-growth UK companies receive the investment they need during the crisis.
Delivered in partnership with the British Business Bank, the fund will provide eligible UK-based companies with between £125,000 and £5 million. The scheme will provide companies with access to capital.
A press release issued yesterday (20th April 2020) indicates these convertible loans will transition into equity during the business’ next qualifying funding round, or once the end of the loan has been reached and full repayment is still outstanding.
The £750 million of targeted support for the most R&D intensive entrepreneurial businesses will be available through Innovate UK’s grants and loans scheme.
Eligibility criteria: How can businesses receive support?
To be eligible for the £1.25 billion support package, a company must meet certain criteria:
- To have raised £250,000 privately in the last five years.
- To be based in the United Kingdom.
- Can attract the equivalent funding from private investors and institutions.
- None of the business’ shares are traded on a “regulated market, multilateral trading facility or other listing venues”.
- The business must have been incorporated on or before 31 December 2019.
- At least one of the following must be applicable:
- Half or more employees are UK-based.
- Half or more revenues are generated from UK sales.
The first payments are due to be paid out by mid-May 2020. The scheme will initially be open until the end of September, though any definitive end date will be kept under close review.
In a move to support UK companies from accelerator programmes outside the UK, the British Business Bank announced this morning (30th June 2020) an extension to the Future Fund scheme to support these companies.
In April, the Government unveiled the crucial details of how to claim under its flagship initiative in response to the pandemic. The Coronavirus Job Retention Scheme went live on 20th April 2020 to support those workers who have been furloughed. As of today 30th June 2020 (when the latest set of statistics for the Government’s support schemes were released by HM Treasury), the CJRS has protected 9.3 million jobs with £25.5 billion claimed in total.
Further figures released this morning indicate that over 967,000 Bounce Back Loans worth £29.5 billion have now been approved and more than 52,000 Coronavirus Business Interruption Loans worth £11 billion have also been approved.
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