The Chancellor has today announced a further £1.25 billion package of support for innovative businesses who have been affected due to Coronavirus.
Finer details are not available at the time of writing this article, although it is understood that funds for this scheme should be available around mid-May. We have not yet seen details of what the criteria are for a company to be classed as “innovative” for these purposes.
The new support is broken down into two elements:
£500m “Future Fund”
This fund will provide unlisted UK based “high growth” companies with between £125,000 and £5 million from the government, but this has to be matched by money from private investors into the company. Further, to be eligible a company must have raised at least £250,000 of equity investment from third party investors in the previous five years to qualify.
These amounts are loans, which if not repaid by the company’s next funding round, or the end of the loan term if sooner, will be converted to equity in the company.
The £500m is a combined figure – £250m from government and £250m from the matched investment.
£750m targeted support
This money will be made available through Innovate UK’s existing grant and loan schemes.
- £200m of existing grant and loan arrangements will be accelerated.
- £550m extra support will be made available for existing customers (of Innovate UK presumably), although as part of this, £175,000 will be “offered” to around 1,200 businesses which are not currently in receipt of Innovate UK funding.
Innovate UK provides support to innovative businesses through both loans and grants, but again it is not known at this stage how much of the additional funding will fall into which support type.
So, in reality, the announced £1.25bn package is actually £800m of new government money, as the rest is either private investor matched funding, or existing support being accelerated.
Initially this looks like another welcome announcement but there will be a lot of finer detail as alluded to above, so it remains to be seen as to exactly who will be able to benefit from this, and indeed if businesses want to use the Future Fund scheme, given that they have to consider the potential of ending up being part owned by the government if repayment terms are not met.
We will continue to monitor things as they develop and provide more information as the details emerge.
James Geary is head of Corporate Tax and is happy to help with any questions or concerns you may have at this time – you can contact James on email@example.com or 01242 776000 to arrange a call back.
At Randall & Payne we have many years’ experience completing grant audits which are required by Innovate UK and would be more than willing to help any business looking to validate their claims.
Please contact Nathan, in our audit department on firstname.lastname@example.org if you would like any assistance, and join our list of clients who have claimed thousands of pounds for their innovative business work.