Chancellor Rishi Sunak has announced a £1.25bn government package to support UK start-ups and businesses driving research and development during the COVID-19 crisis.
The package includes Future Fund, a £500m loan scheme for high-growth firms, and £750m of support for SMEs engaged in research and development.
In a statement Alok Sharma, business secretary, said: “The UK is a world leader in innovation and at this hugely challenging time, we know that young, fast-growing firms require tailored support to see them through. This wide-ranging package delivers important help that will protect some of the most dynamic sectors of our economy.”
Delivered in partnership with the British Business Bank and launching in May, the Future Fund will provide UK-based companies with between £125,000 and £5m, with match funding from private investors. According to HM Treasury, the 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. Eligible businesses will be unlisted, UK-registered and will have raised at least £250,000 in equity investment in the last five years.
The government is committing an initial £250m 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 £750m 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 will accelerate up to £200m of grant and loan payments for its 2,500 existing Innovate UK customers on an opt-in basis. An extra £550m 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 in receipt of Innovate UK funding. The first payments will be made by mid-May.
As a small business, Steve Lindsey, CEO of compressor manufacturer Lontra has welcomed the announcement from the chancellor.
“As an R+D innovative business, we welcome this support from the new chancellor and his advisers. Many innovative businesses may have felt overlooked…and this initiative will certainly enable them to go further, proving the invaluable contribution of these businesses to the UK economy,” he said. “We hope the initiative will be applicable to participants of the UK government’s Enterprise Investment Scheme (EIS) where the contribution from EIS investors is crucial to driving productive research and development. With their support and from [this] announcement, the government is playing a great part in developing Britain’s innovation, an economic strength where the UK clearly leads the way.”