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21 May 2020The Government has promised £250m worth of funding to innovative, high-growth businesses that already rely on private investment.
21 May 2020The Future Fund is designed to help high-growth businesses such as those working in technology, life sciences and the creative industries, survive the coronavirus crisis. The Government is working with the British Business Bank to deliver £250m to these businesses, which will need to be equally matched by private investors, bringing the total fund to £500.
On 20 May, the Government announced applications to the Future Fund would be open until September 2020.
If your application is successful, you’ll be able to borrow between £125,000 and £5m through an unsecured, convertible loan. The Government will match however much your business’ private investors are willing to put in.
A convertible loan allows investors to convert the loan amount into shares in the borrowing business. The borrower will only have to make a cash repayment in certain circumstances, such as if you sell your business, if the loan matures or if you default.
Loans issued through the Future Fund will have terms of 36 months.
You and your investors will need to agree on an interest rate together, with 8% (non-compounding) being the minimum rate for negotiations.
You’ll be able to use the money to keep growing your business and making progress on your projects. However, there are a number of ways that you won’t be allowed to use this loan.
You must not use the money to pay:
In order to be eligible for this scheme, your business must have:
There aren’t just eligibility criteria for your business, your investors will also need to qualify for this scheme. The eligibility criteria for investors is a little more complex than it is for applying businesses – click here to view it in full on the British Business Bank website.
This scheme is ‘investor-led’, meaning your investors will need to complete the application form on the British Business Bank website. Once your investor has done this, you, as the business owner will need to confirm the application.
Businesses can check to see if they are eligible for the Future Fund here.
For more information on this scheme, visit the British Business Bank website.
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Dan is part of the content team at iwoca. He writes articles explaining financial topics, as well as guides on the best support for small businesses during coronavirus.
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