Start-ups warned to act as Government’s Future Fund conversion deadline approaches for many.
Three years ago, the government offered a helping hand for many UK-based start-ups to weather the Covid storm – the Future Fund. Now, many of those companies must convert their loan or face a substantial repayment bill.
Acuity Law’s Start-Ups team explains.
Author: Andrew McGlashan
Key Contact: Tom Saunderson
What is the Future Fund?
During the Covid pandemic, the Government created the Future Fund, a £1.14 billion support scheme for UK-based companies, matching funding from private investors of between £125,000 to £5 million. Operated by the British Business Bank (BBB), the Future Fund was designed to keep start-ups afloat as Covid halted other investment opportunities.
How did the Future Fund work?
The scheme offered between £125,000 to £5 million to start-up businesses through convertible loans, with a three-year conversion deadline. The company must fundraise within that time or repay the full amount of the loan plus the same amount again as a “redemption premium.”
Put simply, if the company is unable to raise financing, it must repay twice the amount of the Future Fund loan.
For solvent businesses, the BBB will extend the deadline, but some have reported a lack of clarity over eligibility.
My company’s Future Fund deadline is approaching. What should I do?
If your deadline is approaching and you are concerned you will be unable to convert or repay your loan in time, you should seek advice quickly.