UK businesses driving innovation and development will be helped through the coronavirus outbreak with a £1.25 billion government support package, the Chancellor of the Exchequer 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.
Mr Sunak commented on the announcement: “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 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.
Alok Sharma, Business Secretary, commented: “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.”
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.
The Future Fund is comprised of £250 million from government combined with equal match funding from private investors.
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.
Sir Mark Walport, Chief Executive of UK Research and Innovation, added: “As an important part of this support package for innovative firms, Innovate UK will provide immediate cashflow support to small companies who are developing the products and services of the future, to continue this work throughout the crisis and be an engine for growth once the outbreak is over.”
The first payments will be made by mid-May.
Further detail on eligibility criteria and fund operation will be published in due course.