Latest details about Future Fund to help innovative UK companies released

 

Announced by the Chancellor on 20 April, the Future Fund issues convertible loans to innovative UK companies with good  potential, that typically rely on equity investment and are currently affected by Covid-19. The scheme will help these companies through the current period of economic disruption and the recovery so they are able to continue their growth trajectory and reach their full economic potential. The scheme is designed by government and delivered by the British Business Bank

The Government has made £250 million available for the Future Fund and will keep this amount under review.

The scheme is initially open for applications from 20 May until the end of September 2020.

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

Loan amounts

The minimum aggregate loan amount is £250,000. The maximum amount of the Government loan is £5 million. There is no cap on the amount that the matched investor(s) may loan to the company.

This is an investor-led scheme, meaning that a lead investor applies on behalf of themselves and may provide information about other investors making up the investment round, in connection to a company.

The distribution of funds for successful applications will be handled through a nominated company solicitor. It is the company’s responsibility to appoint a solicitor with the necessary right to practice and handle client monies.

There is no requirement to have a formal valuation to save valuable time but EIS investors will be disappointed to learn that they will not be able to get EIS tax relief.

Enterprise Capital Funds, which include private investors and public money from the British Business Bank  have been deemed eligible for Future Fund investment.

The bad news is that new equity investment will not attract EIS relief for the investor however it appears that previous SEIS/EIS investors in the company will retain their beneficial  tax status

To be eligible for the scheme, the company must meet the following criteria:

  • The company must have raised at least £250,000 in equity from third-party investors in previous funding rounds in the last five years (from 1 April 2015 to 19 April 2020, inclusive)
  • If the company is a member of a corporate group, it must be the ultimate parent company
  • The company does not have any of its shares or other securities listed on a regulated market, a multilateral trading facility, a recognised investment exchange and/or any other similar market, stock exchange or listing venue
  • The company must be a UK incorporated limited company
  • The company must have been incorporated on or before 31 December 2019
  • At least one of the following must be true for the company:
  • Half or more employees are UK based
  • Half or more revenues are from UK sales

For more information on the scheme read the FAQ’s

If you have any queries relating to the above for further information please contact Partner, Simon Palmer at spalmer@garbutt-elliott.co.uk