Future Fund Opens for Applications
Key Contact: Christian Farrow
Author: Chris Doherty
Future Fund is a £250 million fund which has been set up to support innovative companies which are facing financing difficulties due to the coronavirus outbreak and are unable to access other government business support programmes because they are either pre-revenue or pre-profit.
The scheme is to open for applications on Wednesday 20 May 2020 and will remain open until the end of September.
The £250 million investment fund will support high growth, UK-based companies through convertible loans of between £125,000 and £5 million, subject to at least equal match funding from private investors.
A business will be eligible for the fund if:-
- it is a UK-incorporated limited company (and, if part of a group, is the ultimate parent company);
- it has raised at least £250,000 in equity investment from third-party investors in the last 5 years;
- none of its shares are traded on a regulated market, multilateral trading facility or other listing venue;
- it was incorporated on or before 31 December 2019; and
- at least one of the following is true:
- half or more employees are UK-based; or
- half or more revenues are from UK sales.
The application process is investor-led, meaning that the investor or lead investor from a group of investors must apply for funding under the scheme with an eligible company. The eligibility criteria for investors is set out in full here.
Loans advanced under the Scheme will incur a minimum of 8% per annum (non-compounding) interest. Interest will accrue until the loan converts, at which point it will either be repaid or convert into equity. The loan will mature after 36 months and cannot be repaid early (except by agreement of the investors).
The loans will convert into shares in the company in certain circumstances, including an exit or a new funding round. A template loan agreement has been included on the Government website.
Funding received through the scheme must not be used to repay any borrowings; pay any dividends; pay any bonuses (for a period of 12 months); or pay any advisory fees.
Government Trade Credit Insurance Guarantee
Trade Credit Insurance protects suppliers against their trade customers for payment defaults. Due to the economic impact of Covid-19, many businesses have been unable to settle bills with their suppliers, and insurers are concerned they will face a huge surge in claims. This has led to many insurers withdrawing Trade Credit Insurance or drastically increasing premiums. There have been concerns that businesses which cannot obtain insurance coverage will be unable to operate with confidence, and this may lead to a downturn in trading.
In order to help businesses trade with confidence, the Government will temporarily guarantee business-to-business transactions currently supported by Trade Credit Insurance. The system is due to be in place by the end of May and will last until the end of the year.
Infection Control Fund for care homes
The Government has announced that a £600 million Infection Control Fund will be made available to support care homes in implementing measures to reduce transmission of the Coronavirus.
The fund is ringfenced for social care and will be administered by local authorities, who will be expected to conduct a daily review of care homes in their area in order to assess support needs, including (but not limited to) staffing and personal protective equipment requirements.
In order to minimise transmission of the virus and to reduce the risk of outbreaks, care homes will be asked to limit staff to working in only one care home if possible. The funding will also seek to increase workforce recruitment in the social care sector.
The Government has instructed local authorities to initially pay 75% of the funding directly to care homes within their area for use on infection control measures. The distribution of the remaining 25% of the funding will be conditional on the first payment having been used for infection control measures.
An allocation table for the Infection Control Fund in England can be found here.
The scheme will cover frontline staff in England, but the Welsh Government will receive £35 million in funding through the Barnett formula.
Please see our daily updated Financial Support Guide for Businesses for further information- COVID-19 FINANCIAL SUPPORT FOR BUSINESSES.
For more information on any of the points raised, please contact our corporate team.