On 20 April 2020, the Chancellor announced that UK businesses driving innovation and development will be helped through the Coronavirus outbreak with a £1.25 billion government support package. Rishi Sunak said that the targeted and tailored help would ensure firms in some of the most dynamic sectors of the UK economy, ranging from tech to life sciences, are protected through the crisis so that they can continue to develop innovative new products and help power UK growth.
The comprehensive package includes a new £500 million loan scheme for high-growth firms, called the Future Fund, and £750 million of targeted support for small- and medium-sized businesses focusing on research and development. The Future Fund has been designed to ensure high-growth companies across the UK receive the investment they need to continue during the crisis.
Delivered in partnership with the British Business Bank and launching in May 2020, the fund will provide UK-based companies with between £125,000 and £5 million from the Government, with private investors at least matching the government commitment. These loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid. To be eligible, a business must be an unlisted UK registered company that has previously raised at least £250,000 in equity investment from third party investors in the last five years.
The Government is committing an initial £250 million in funding towards the scheme, which will initially be open until the end of September 2020. The scale of the fund will be kept under review.
The £750 million of targeted support for the most R&D intensive small- and medium-sized firms will be available through Innovate UK’s grants and loan scheme. Innovate UK, the national innovation agency, will accelerate up to £200 million of grant and loan payments for its 2,500 existing Innovate UK customers on an opt-in basis. An extra £550 million will also be made available to increase support for existing customers and £175,000 of support will be offered to around 1,200 firms not currently in receipt of Innovate UK funding. The first payments will be made by mid-May 2020.
The Government says that this package builds on its existing support for innovative, high-growth firms including the £2.5 billion British Patient Capital fund, the upcoming £200 million Life Sciences Investment Programme, internationally competitive R&D tax reliefs and its major commitments to increase public R&D spending to £22 billion by 2024-25. To read the Government’s press release in full, click here.