The impact of a global pandemic the likes of which we have not seen in our lifetimes has been profound, and the effect on businesses and cash-flows has been in many cases catastrophic. The UK governments response has received mixed reviews, however there have been some extremely helpful measures put in place to help businesses, one of the lesser known being the Future Fund which was launched on 20 May.
This is a £250m fund to provide government backed loans of between £125,000 and £5,000,000 to innovative UK businesses, typically start-ups and scale-ups pre-profit, who are not suitable for CBILS. In essence, the fund will match private investment to these businesses by way of a convertible loan, with repayment at a discount on the next round of funding, exit or a maximum of three years.
This is a generous scheme and for the right company can be exactly what is needed to weather the Covid-19 storm and strategise to follow this with a period of growth and success. The key highlights are:
- Companies must be based in the UK
- Must have at least half of staff and revenue from the UK
- Must have raised a minimum of £250,000 from private external investors for equity in the five years prior to 19 April 2020
- Have the ability to attract funding from private investors to match the government scheme
- Funds must be used for working capital
- Interest will be minimum 8%pa
- Discount rate 20%
How to Apply?
The scheme is run through the British Business Bank and there are several stages to go through. The key is to line up suitable private investors in order that the lead investor can confirm eligibility for the round of investment. Following this an application process is made with the British Business Bank, and terms are then negotiated and offered, in conjunction with the private investors. If you feel this is could be a benefit to you, Vantage can help to raise both the private investment in order to start the process, and then walk you through the Future Fund application to success. It is not every day you can double private investment into your Company through the government, our advice would be strike while they iron’s hot and speak to us today, the scheme is on a first come first served basis.
Pat McCreesh, Partner, Vantage Corporate