The Government has announced the launch of a new scheme to issue convertible loans to innovative companies.
To be eligible for a loan under this scheme, a business must:
- be an unlisted UK registered company,
- have raised at least £250,000 in aggregate from private third-party investors in previous funding rounds in the last five years, and
- have a substantive economic presence in the UK.
We’re still waiting for full details about the Future Fund and how it will work, but headline details that are available now include:
- Eligible companies must raise at least the same amount from a third-party funder
- The minimum loan will be £125,000
- There are restrictions on what the money can be used for
- The loan will automatically convert to equity if it is not repaid by the time of the next funding round/end of the loan
- The scheme is open for applications for funds from Monday 4 May until September 2020.
We’re particularly interested to understand how the Future Fund will interact with the Seed Enterprise Investment Scheme (SEIS) and the Enterprise Investment Scheme (EIS) but, if your company has raised third-party funding, this may be helpful and well worth looking into. We would certainly hope that the scheme will allow new third-party investors providing the matched funding to obtain EIS relief on any new investment but, for now at least, this remains unclear.
We will keep an eye on developments and update you when we know more. In the meantime, read more here and, if you think your company might qualify or you have any queries, please contact Helen Wilkinson.