Chancellor unveils £1.25bn in support for start-ups
Chancellor Rishi Sunak has unveiled a £1.25bn support package for Britain's start-ups during the COVID-19 crisis.
Speaking at the Government's daily briefing Sunak officially launched the Future Fund worth £500 million, aimed at high-growth companies. Launching next month it will provide UK-based early stage companies with convertible loans between £125,000 and £5 million.
The Government's Future Fund will match investments made by private investors in early stage businesses, "on terms that protect the UK taxpayer".
If the loans, offered by the British Business Bank, are not repaid the Government will end up owning stakes in the start-ups in question. The government plans to offer £250m until the end of September before reviewing the scheme.
In addition the Government has launched £750 million of grant and loan funding for "highly innovative" firms "in every sector, and every region and nation of the UK", which has been conceived with national innovation agency, Innovate UK.
Sunak said the innovation agency would “accelerate” up to £200m in payments to 2,500 existing customers, while £550m will also be made available to increase support to these firms.
About 1,200 hi-tech firms in Britain not already in receipt of Innovate UK funding will be offered £175,000.
“Our startups and businesses driving research and development are one of our great economic strengths, and will help power our growth out of the coronavirus crisis," Sunak said.
Start-ups had largely fallen through the gaps of the previous small business loan scheme since many are not yet making profits and would not receive approval from high street banks for the loans, despite the Government underwriting 80% of the loans.
The news was revealed on the day the Government's furlough scheme went live, which received applications from 140,000 businesses. Applications are open until Wednesday for the scheme that runs until the end of June. Companies can claim up to 80%, or a maximum of £2,500 per furloughed employee.