By Phil Ellerby
On the back of our recent update on the Small Business Bounce Back Loan, we provide details of another loan option, the Future Fund Scheme. This one is for high-growth tech start-up businesses facing financial challenges during COVID-19.
What is it
The Future Fund Scheme is based on the Government making available £250 million in total through the British Business Bank. These convertible loans range from £125,000 to £5 million in total.
Who is it aimed at
It is specifically for high growth tech start-ups, those who need financial support during COVID-19, and would normally rely on equity investment. Those who cannot access the Coronavirus Business Interruption Loan Scheme.
When is it launched
This is what we don’t know yet but the intention is it will be rolled out from May through to September 2020.
a) The company must be an unlisted UK registered company.
b) It must have raised at least £250,000 in private funding within the last 5 years.
c) It must have a sustained economic presence in the UK.
Future Fund Scheme conditions
a) The loan shall mature after a maximum period of 3 years.
b) The loan must be used only as working capital.
c) The interest will be set at a minimum of 8% and will be paid at the end of the loan term.
The interest rate shall be higher if a higher rate is agreed between the company and the matched investors.
d) Eligible companies must acquire private investment to match that of the Government
funding. Government investment will make up no more than 50% of the overall amount.
e) The Government shall have limited corporate governance rights during the term of the loan and as a shareholder if the loan is converted into shares.
f) If the loan is converted to shares the ‘most senior class of shares’ must be offered, comparable to the value of the loan.
If you are a high growth tech start-up this is a good one for you to be aware of. If you need further clarity, please get in touch on 0113 218 552.