The government announcement on 20 April the introduction of the “Future Fund”, an initiative designed to support innovative businesses who have been affected by Covid-19 but are unable to access other government support packages.
Specifically, it seeks to help those businesses that would ordinarily rely on equity investment and have not been seen as “viable” when applying for the Coronavirus Business Interruption Loan Scheme (CBILS) because they are pre-revenue and/or pre-profit.
An initial £250 million will be made available for government loans of £125,000 to £5 million on a matched basis subject to private investors funding an equivalent amount.
The headline eligibility criteria released to date are as follows:
- The business must be based in the UK
- The business must attract the equivalent match funding from third party private investors and institutions
- The business must have previously raised at least £250,000 in equity investment from third party investors in the last 5 years
The government funding will be in the form of convertible loans. Initial details on the expected conversion terms (i.e. conversion at a 20% discount to the reference price for the next funding round, sale or IPO or on maturity of the loans after a maximum term of 36 months), as well as other conditions, including interest (i.e. a minimum of 8% per annum non-compounding) and more detailed criteria can be found on the .gov.uk website.
The current expectation is that the Future Fund will be launched for applications in May and will run until at least the end of September.
Innovate UK’S Grant and Loan Scheme
A further £750 million of support has also been announced for R&D intensive small and medium sized business through Innovate UK.
This support will predominantly support Innovate UK’s 2,500 existing customers, although some support will be offered to around 1,200 firms not currently in receipt of funding.
The first payments will be made by mid-May.
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