Government support for innovation.
The Chancellor announced new support for start-ups, scale-ups and companies driving innovation on 20 April 2020. The support announced has two components as follows:
Convertible loans of between £125,000 and £5,000,000 to be provided to the government to UK based companies, subject to match funding being provided by third party investors.
To be eligible, the company must have raised at least £250,000 from third party investors in the past five years.
The convertible loans must be used for working capital and are unsecured. The loan must be repaid within 36 months and will attract an interest rate of 8% per annum payable on maturity.
The convertible loan will convert into equity automatically on maturity i.e. 3 years from the date of the loan, an exit, or qualifying fund round (a funding round in excess of the value of the loan less conversion discount).
A majority of the investors that provide the match funding may elect to convert the loan into equity in the event of a non-qualifying funding round (a funding round less than the value of the loan), at the discount rate to the price set by that funding round.
The application process is expected to be via the British Business Bank and is currently under development.
The scheme is due to launch in May. Further details and full eligibility criteria to be announced in due course.
- SMEs focusing on research and development will benefit from £750m of grants and loans via Innovate UK
Innovate UK will accelerate the payment of grants and loans for its existing 2,500 customers on an opt-in basis and £175,000 of support will be offered to around 1,200 not currently in receipt of Innovate UK funding.
If you have any questions on the business support available please contact us
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