COVID-19 SUPPORT: Daily Update – Monday 20 April 2020
Key Contact: Christian Farrow
Author: Elena Visser
A new £1.25 billion package has been revealed today to help support start-ups in the UK
The government has revealed today that it will invest in some of the most innovative start-ups to help them survive in a scheme that will launch in May. Start-ups had been calling for more support after France and Germany had offered similar schemes to bolster their own local start-ups.
The package includes a £500 million investment fund, known as the ‘Future Fund’ for high growth companies hit by the crisis with their venture capital backers, and will provide UK based companies with loans of between £125,000 and £5 million. Private sector money will be matched with state backed loans that can convert into equity stakes (valued at a discount if not repaid). These convertible loans may be a suitable option for businesses that rely on equity investment and are unable to access the Coronavirus Business Interruption Loan Scheme.
To be eligible, a business must be unlisted, UK registered, must be able to attract the equivalent match funding from third party private investors and institutions, and also have previously raised at least £250,000 in equity investment over the last five years. Full eligibility criteria are due to be published in due course.
In addition, £750 million will be made available through grants and loans from Innovate UK, the national innovation agency, with the first payments to be made by mid-May.
Although full details of the scheme are yet to be announced, the initial information about the scheme can be found here.
The Coronavirus Large Business Interruption Scheme (CLBILS) launches today for large businesses
This scheme aims to support large businesses with an annual turnover of over £45 million and all viable businesses will be able to apply for up to £25 million of finance. Firms with a turnover over more than £250 million will be able to apply for up to £50 million of finance.
The scheme will be available through a series of accredited lenders listed on the British Bank website. The UK government will provide lenders with an 80% guarantee on individual loans. Facilities backed by a guarantee under CLBILS will be offered at commercial rates of interest.
Eligibility criteria include being UK based, being able to self certify that your business has been adversely affected by coronavirus and not receiving a facility under the Bank of England’s COVID-19 Corporate Financing Facility.
Please visit the British Bank website for further information which can be found here.
The Welsh Government has released an additional £100 million to support businesses
A further £100 million has been released due to unprecedented demand for support under the Welsh Economic Resilience Fund. More than 6,000 grant applications from small and medium sized businesses and social enterprises were received within 24 hours of the launch on Friday.
The Economic Resilience Fund aims to complement and fill the gaps left by the UK government schemes such as the Job Retention Scheme, with grants of up to £10,000 for micro-enterprises and up to £100,000 for SMEs.
The additional £100 million now takes the Economic Resilience Fund up to £300 million and will supplement the latest phase of support, providing non-repayable grants to microbusinesses, SMEs and those large businesses of critical, social or economic importance to Wales.
The Welsh government’s announcement can be found here.
Please see our daily updated Financial Support Guide for Businesses for further information- COVID-19 FINANCIAL SUPPORT FOR BUSINESSES
For more information on any of the points raised, please contact our corporate team.