Innovative companies can now apply for a convertible loan – which will convert to equity if not repaid – of up to £5 million to support growth and development, it has been announced.
Known as the Future Fund, the multi-million-pound finance facility is designed to support diverse sectors, such as technology, life sciences and the creative industries, as well as female entrepreneurs.
The Government will put forward an initial £250 million for investment in early-stage start-up businesses, providing it is matched by private investors, such as venture capital funds and angel investors.
The Government says it will also amend the rules of the Enterprise Investment Scheme (EIS) – which provides tax relief to investors in high growth firms – to “protect Future Fund investors from losing relief on their previous investments made prior to any investment through the Future Fund”.
It is believed that the Future Fund will be open until September, initially offering loans of between £125,000 and £5 million.
To qualify, your business must have previously raised at least £250,000 in equity investment from third parties in the last five years, and have half or more of their employees based in the UK or generate at least half of their revenue through UK sales.
Welcoming the scheme, Kate Boguslawska, Commercial Solicitor and Partner at Carter Lemon Camerons LLP, said: “The proposal of the Future Fund will give the much-needed boost to start-ups and existing companies.
“I am glad that the government is backing FinTech companies and that it recognised the need for diversity on the market by opening the Fund to female entrepreneurs.
“Whilst we are observing a rise in female-owned and led companies, they are still in the minority. The Future Fund will help reduce this gap in the market and is likely to encourage more women to become entrepreneurs.”
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