Chancellor Rishi Sunak is throwing entrepreneurs a £250 million lifeline to rescue start-up businesses as part of his coronavirus financial rescue package for the country.
Future Fund bridges the gap for businesses that fail to meet the requirements of the Coronavirus Business Interruption Loan Scheme (CBILS).
The fund is aimed at new businesses in pre-trading or research and development that need to raise equity finance.
Most do not qualify for CBILS because they have no revenue or profits but rely on business angels or institutional investors for the money they need to grow.
“Britain is a global leader when it comes to innovation. Our start-ups and businesses driving research and development are one of our great economic strengths, and will help power our growth out of the coronavirus crisis,” said the Chancellor.
Matched loans that convert to equity
“This new, world-leading fund will mean they can access the capital they need at this difficult time, ensuring dynamic, fast-growing firms across all sectors will be able to continue to create new ideas and spread prosperity.”
Future Fund is offering UK companies loans between £125,000 and £5 million matched pound-for-pound by private investors.
The cash is for working capital and converts to equity in the company at the next fund-raising round.
The British Business Bank will run the scheme, which opens between May 20 and the end of September.
Business leaders have welcomed Future Fund.
Business leaders praise measure
Will Shu, CEO and founder of Deliveroo, said: “It’s great news that the Chancellor is supporting British start-ups that are innovating and will be so vital to the UK economy in the months and years ahead with such a practical and thoughtful scheme.”
Gerard Grech, Chief Executive, Tech Nation said: “This is a bold and welcome intervention for the tech sector. Tech start-ups and scale-ups are crucial to the UK’s future growth, jobs and innovation.
At this moment of global crisis, the UK must ensure that the tech sector builds on the huge successes it has achieved over the past 10 years, and that it continues to deliver for the economy. In 2019, a staggering 33% of all European tech investment was in the UK. We must do everything to keep building on this success story.”
The Treasury will publish full Future Fund details before May 20, but has already issued headline terms.