Fast-growing tech companies can now apply for a “convertible loan” of between £125,000 and £5 million through the Government’s Future Fund.
The £500 million facility will enable firms who are not eligible for existing coronavirus schemes to access affordable finance.
Under the new scheme, the Government will match the investment of private investors in the form of convertible loans, which convert to discounted equity if the borrower is unable to repay the loan.
Aimed at early-stage innovative companies, the borrower must have raised at least £250,000 in equity investment from third parties in the last five years. The borrower must also have half or more of their employees based in the UK or generate at least half of their revenue through UK sales.
According to Government guidance, convertible loans “may be a suitable option for businesses that typically rely on equity investment” and are “unable to access other government business support programmes because they are either pre-revenue or pre-profit”.
Commenting on the new scheme, Michael Moore, Director General of the British Private Equity and Venture Capital Association (BVCA) said: “The Future Fund is hugely significant and very welcome. For many venture capital-backed businesses it will build the bridge from today’s severe challenges to the period of recovery, enabling them to survive then thrive.”
He added: “The post-COVID economy is likely to look very different to today’s. The global leadership of venture capital-backed companies in the digital, high technology and life science parts of the UK economy will be critical to the UK’s success and this government support will help them to do that.”
The Future Fund will open for applications today, Wednesday 20 May.
For more information about the Future Fund, which is administered through the British Business Bank (BBB), please click here.
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