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COVID-19 Information Hub

Coronavirus Business Innovation Scheme

On 20 April the Chancellor announced a two-part support package for ‘innovative firms’, which means mainly start-ups and other venture capital-backed business that would be unable to raise CBLIS or CLBILS finance.

Please read on for a summary issued by the government and our own supplementary commentary, analysis and guidance.

Updated 20/04/20

Government guidance:

Future Fund

The scheme is not available yet. It will launch in May 2020.

The Future Fund will provide government loans to UK-based companies ranging from £125,000 to £5 million, subject to at least equal match funding from private investors.

These convertible loans may be a suitable option for businesses that rely on equity investment and are unable to access the Coronavirus Business Interruption Loan Scheme.

The scheme will be delivered in partnership with the British Business Bank.

Eligibility

You’re eligible if your business:

  • is based in the UK
  • can attract the equivalent match funding from third-party private investors and institutions
  • has previously raised at least £250,000 in equity investment from third-party investors in the last five years

Full eligibility criteria will be published shortly.

Targeted Support for Research and Development (R & D)

£750 million of targeted support for the most R&D intensive small and medium size firms will be made available through a grants and loan scheme operated by Innovate UK, the national innovation agency.

Innovate UK will accelerate up to £200 million of grant and loan payments for its 2,500 existing 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.

Kirk Rice commentary:

Whilst this new scheme will not be relevant for most companies; it has been widely reported in the media. Full eligibility details are to follow but what we understand is listed below;

  • The business has previously raised at least £250k in equity investment from third-party investors in the last five years;
  • The business can borrow unsecured funding up to the level of funding from third-party private investors;
  • The business must be based in the UK with a substantial UK presence;
  • Only the parent company can receive the loan;
  • The loan may only be used for working capital purposes and cannot be used to repay any borrowings, pay dividends or bonus payments or consultants or, in respect of the Government loan, pay any advisory or placement fees or bonuses to external advisers.
  • The scheme is available from May until the end of September 2020.

The loans are for a maximum period of 3 years, following which, if they are not repaid, will convert to equity, something that is unlikely to be popular with business owners.

We’ll be updating this page for the answers as and when they become available, so please, do check back regularly for further information.

 

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