The Chancellor, Rishi Sunak, announced £1.25 billion of government support for innovative firms at the Downing Street Press Conference yesterday (20 April 2020).
He commented:
“As we look ahead and start to plan for our recovery, it is critical we don’t just maintain companies and jobs that already exist but that we also encourage the businesses, jobs and technologies of the future.
Innovation and entrepreneurship have powered growth in our country for centuries; and it is what will drive our growth as we recover from this crisis.”
£500M FUTURE FUND
The Chancellor then announced a £500 million Future Fund would be launched in May.
Designed to give UK based, high growth but early stage companies, access to the investment they need during the Covid-19 crisis, government loans of between £125,000 and £5 million will match fund private investment. 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 scheme is to be launched in May, delivered in partnership with the British Business Bank and open initially until the end of September 2020. The Future Fund Headline Terms can be found here.
£750M INNOVATE UK’S GRANTS AND LOAN SCHEME
The second initiative provides £750 million of grant and loan funding through Innovate UK to thousands of innovative, research and development focussed SMEs in the UK.
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.
Mike Cherry, Federation of Small Businesses National Chair, said:
“Today’s announcement will be a vital cashflow boost for many smaller businesses at the forefront of technological development and innovation. This is an investment in transforming our futures, as these SMEs focus on research and development in key areas such as life sciences, artificial intelligence, big data, and clean energy. We will work with the Chancellor, British Business Bank and Innovate UK to raise awareness of the programmes and get this help out to where it’s needed.”
Craig Simpson, Tax partner at Bates Weston adds:
“It is very positive news that the government are looking to help innovative business in the UK. At this time of great change in our economy it is vital that the government continue to support our thriving innovation sector through these measures and the tax system.“