On the evening of Monday 20 April 2020, the Chancellor of the Exchequer announced the government’s £1.25bn package to support start-up businesses across the U.K which are facing financing difficulties.
With the government looking at start-up businesses with innovative research as crucial to the recovery of the UK economy, the Chancellor announced two initiatives designed to support start-ups who are ineligible for the other government-backed loans due to their early-stage profitability.
The first of this two-part package is a co-investment fund labelled the ‘Future Fund’. The fund will make up to £500 million available to start-ups. The government has pledged £250 million, and the private sector will make up the remaining half.
The Future Fund will launch in May 2020 and will be open until the end of September 2020.
The fund will provide eligible start-ups between £125,000 and £5 million, in the form of convertible loans, as long as the funding is at least matched by private investors. These loans will convert into an equity stake – at a discounted rate – in the company if the money is not repaid.
To be eligible, your business:
For further information relating to the Future Fund, please visit: https://www.gov.uk/guidance/future-fund.
The second part of the rescue package is targeted at small-to-medium enterprises that focus on research and development.
£750 million will be available through Innovate UK’s existing grants and loan scheme. The majority of the fund will be available to Innovate UK’s 2500 existing customers. 1,200 companies not currently part of Innovate UK will also receive funding.
The first of these payments will be made by mid-May.
Pressure had been growing in recent weeks for the government to give support to the UK’s start-up sector.
Although some critics raised concerns that funding should be used on companies that are more likely to succeed, the initial news has been met with positivity. However, as with other government-backed schemes, any opinion will be reserved until the scheme is implemented and the speed at which it is delivered.
If you have any questions regarding the impact of the Coronavirus upon your business or are seeking up-to-date legal advice on Company & Commercial matters, contact Shaun Guppy on 01202 294 566 or email ShaunGuppy@steeleraymond.co.uk.
We will only use this information to handle your enquiry and will not share it with anyone else.