The government has expanded its Future Fund scheme for start-ups businesses. The reforms in scheme aim to support start-up businesses not eligible for other Coronavirus (Covid-19) rescue measures.
The start-ups that have previously taken part in accelerator programmes can now easily access the Future Fund Scheme. However early-stage firms might continue to struggle.
This means that UK companies who have participated in accelerator programmes will now be able to apply for investment. They can apply for the scheme without having parent companies outside of the UK.
However, companies will still have to meet the ‘substantive economic presence’ tests, whereby half or more employees are UK-based and/or half or more revenues are from UK sales.
The change will ensure that firms which have moved their headquarters abroad can still access the scheme.
The Future Fund offers government loans of between £125,000 and £5 million to UK-incorporated companies. Provided private investors at least match the funding supplied by the state. Hence the package will benefit the innovative start-up businesses not eligible for existing Covid-19 support. Start-ups have so far received £320 million of support through the initiative, and the government says it’s willing to increase the fund’s size if necessary.
British Finance Minister Rishi Sunak said in a statement Tuesday:
“Our start-ups and innovative firms are one of our great economic strengths,”
“As we begin to bounce back from Coronavirus they will help drive our recovery and create new jobs. This change means that those start-ups who have strived to be the very best, and taken opportunities to grow their business, will be able to benefit from our world-leading Future Fund.”
Commenting on the matter, Business Secretary Alok Sharma also said:
‘As we restart our economy, it is crucial that our innovators and risk-takers get all the support they need to flourish.
‘Our decision to relax this rule recognizes the importance of many of the UK’s most cutting-edge start-ups as we bounce back from Coronavirus.’
Germany and France have taken similar measures to provide support to their start-ups. They believe Covid-19 crisis makes it harder for younger tech firms to raise money.
Meanwhile, the European Union is reportedly looking to relax its state aid rules to help tech start-ups.
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