Support for Fast Growing Technology Start-up Businesses
26th May 2020
Even though the lockdown is lifting, the impact of this period of disruption continues to impact businesses.
No one can deny that the Government has provided a lot of help and aid to keep the economy afloat but, as always, not every type of business is assisted by every type of initiative. One example is the technology start-up sector which, because the businesses are, by their very nature, new, have found it difficult to access the Business Interruption Loan Scheme.
For them, instead is the Future Fund Scheme (FFS).
What is the FFS?
The FFS is a Government convertible loan scheme. Initially, the Government will make available £250 million in total through the British Business Bank. The convertible loans will range from £125,000 to £5 million in total.
It is specifically aimed at High- growth tech start-ups who are struggling under the current crisis, who rely on equity investment and cannot access the Coronavirus Business Interruption Loan Scheme.
The scheme is now open for applications and will be open through to September 2020.
Am I eligible for FFS?
You can apply for this loan if:
- Your company is an unlisted UK registered company - a limited company or LLP – which was incorporated on or before 31 December 2019
- More than half your employees are UK-based or more than half your revenue comes from UK sales.
- You have raised at least £250,000 in private funding within the last 5 years
- You have a sustained economic presence in the UK
- You can match the amount you are to borrow with further private investment - the government will only provide 50% of the overall amount you wish to raise.
What are the terms of the loan?
The FFS is a fixed-term loan of three years and is not interest-free. The interest will be set at a minimum of 8% (to be paid at the end of the loan term). In some cases the interest rate may be higher if the matched investors require it (although you can, of course, decline to accept the loan).
This loan is to be used for working capital and by taking it, you give the Government (limited) corporate governance rights during the term of the loan.
If the loan is converted to share, the Government will be a shareholder of the ‘highest class of shares’ equal to the value of the loan.
Clearly this is a specialised loan and won’t be for every business but you can find out more and check if you are eligible here: https://www.uk-futurefund.co.uk/s/
And, if you need help to provide the business plans and cashflow projections to support your loan application, Grant-Jones can provide the expertise and technical knowledge you need to create a compelling case. Contact us to see how we can help.