UK businesses driving innovation and development will be helped through the coronavirus outbreak with a £1.25 billion government support package, the Chancellor announced today. Package includes a £500 million investment fund for high-growth companies impacted by the crisis, made up of funding from government and the private sector SMEs focusing on research and development will also benefit from £750 million of grants and loans UK businesses driving innovation and development will be helped through the coronavirus outbreak with a £1.25 billion government support package, the Chancellor announced today.
Rishi Sunak said the targeted and tailored help would ensure firms in some of the most dynamic sectors of the UK economy – ranging from tech to life sciences – are protected through the crisis so they can continue to develop innovative new products and help power UK growth.
The comprehensive package includes a new £500 million loan scheme for high-growth firms, called the Future Fund, and £750 million of targeted support for small and medium-sized businesses focusing on research and development.
Chancellor of the Exchequer Rishi Sunak said: Britain is a global leader when it comes to innovation. Our start-ups and businesses driving research and development are one of our great economic strengths and will help power our growth out of the coronavirus crisis. This new, world-leading fund will mean they can access the capital they need at this difficult time, ensuring dynamic, fast-growing firms across all sectors will be able to continue to create new ideas and spread prosperity.
The £500 million Future Fund has been designed to ensure high-growth companies across the UK receive the investment they need to continue during the crisis. Delivered in partnership with the British Business Bank and launching in May, the fund will provide UK-based companies with between £125,000 and £5 million from the government, with private investors at least matching the government commitment. These loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid. To be eligible, a business must be an unlisted UK registered company that has previously raised at least £250,000 in equity investment from third-party investors in the last five years.
The government is committing an initial £250 million in funding towards the scheme, which will initially be open until the end of September. The scale of the fund will be kept under review. The £750 million of targeted support for the most R&D intensive small and medium-size firms will be available through Innovate UK’s grants and loan scheme.
Innovate UK, the national innovation agency, will accelerate up to £200 million of grant and loan payments for its 2,500 existing Innovate UK 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.
This package builds on the government’s existing support for innovative, high-growth firms including the £2.5 billion British Patient Capital fund, the upcoming £200 million Life Sciences Investment Programme, internationally competitive R&D tax reliefs, and our major commitments to increase public R&D spending to £22 billion by 2024-25.
The £500 million Future Fund is comprised of £250 million from government combined with equal match funding from private investors
further detail on eligibility criteria and fund operations will be published in due course.
Daniel Hegarty, founder and CEO of Habito “As a start-up and the UK’s leading digital mortgage company already helping the millions of homeowners and would-be homeowners affected by the coronavirus crisis across the nation, we welcome the Chancellor’s new support package with open arms. We’re already seeing start-ups adapting, pivoting and innovating at pace to help both customers and industry stakeholders navigate this time of uncertainty and I have no doubt businesses like ours will be key to helping stabilize the economy in the coming months.”
We welcome the announcement from the Chancellor regarding support for high-growth FinTechs and start-ups. Financial innovation will play a vital role as we emerge from the crisis, especially in areas of financial inclusion, SME financing, and digital transformation of the financial services sector. More broadly, this is about protecting the innovation in finance that will be vital for the UK’s recovery efforts. These new measures will help FinTech businesses to raise funds needed to survive the crisis. It will support a sector full of early-stage companies, which are more prone to struggle in these volatile times. The UK is already known globally as a leader in FinTech, and we want to ensure companies have support and funding in place to continue their development at this crucial time.
“It’s welcome to see the Government continuing to adapt its support measures in response to the situation on the ground. Our start-up community has been a driving force for the economy, and it’s vital they get the support they need. At such difficult times, the importance of innovation comes to the fore. When we emerge from this challenging time, we will need the UK’s entrepreneurial spirit to be stronger than ever.” Said, Tej Parikh, IoD Chief Economist.
The UK is a global leader in critical aspects of the digital, high technology, and life science economies. In essence, this scheme recognizes the sector’s importance and will help businesses to navigate the COVID-19 crisis as we seek to maintain and develop that leadership position.