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Announcing the support, chancellor Rishi Sunak said the “targeted and tailored” help would protect firms in some of the most dynamic sectors of the UK economy, from technology to life sciences, to help them continue to develop innovative new products and power UK growth.
The package includes a £500m loan scheme for high-growth firms, called the Future Fund, and £750m of targeted support for small and medium sized businesses focusing on research and development.
The £750m will be available through Innovate UK’s grants and loan scheme. The national innovation agency will accelerate up to £200m of grant and loan payments for its existing 2,500 customers on an opt-in basis. An extra £550m will also be made available to increase support for existing customers, and £175,000 will be offered to around 1,200 firms not currently receiving Innovate UK funding. The government said the first payments will be made by mid-May.
“As an important part of this support package for innovative firms, Innovate UK will provide immediate cashflow support to small companies who are developing the products and services of the future, to continue this work throughout the crisis and be an engine for growth once the outbreak is over,” said Sir Mark Walport, chief executive of UK Research and Innovation.
The £500m Future Fund is designed to ensure high-growth companies receive the investment they need to continue during the crisis. Delivered in partnership with the British Business Bank and launching in May, the fund will provide UK-based companies with between £125,000 and £5m from the government, with private investors at least matching the government commitment. The loans will automatically convert into equity on the company’s next qualifying funding round, or at the end of the loan if they are not repaid. To be eligible, a business must be an unlisted UK registered company that has previously raised at least £250,000 in equity investment from third party investors in the last five years.
The government is committing an initial £250m to the scheme, which will initially be open until the end of September. The scale of the fund will be kept under review.
“Our start-ups and businesses driving research and development are one of our great economic strengths, and will help power our growth out of the coronavirus crisis,” said Sunak. “This new, world-leading fund will mean they can access the capital they need at this difficult time, ensuring dynamic, fast-growing firms across all sectors will be able to continue to create new ideas and spread prosperity.”
The package builds on existing support for innovative, high-growth firms including the £2.5bn British Patient Capital fund, the upcoming £200m Life Sciences Investment Programme, R&D tax reliefs and a commitment to increase public R&D spending to £22bn by 2024-25.
“The UK is a world leader in innovation and at this hugely challenging time, we know that young, fast-growing firms require tailored support to see them through,” said business secretary Alok Sharma. “This wide-ranging package delivers important help that will protect some of the most dynamic sectors of our economy.”
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