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UK Government announces £1.25 billion "Coronavirus Relief Package" for innovative firms hit by Coronavirus, including £500m Future Fund and £750m additional R&D "innovation" funding for SMEs

24 April 2020
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The Chancellor of the Exchequer, Rishi Sunak MP, has announced two new Government funds worth £1.25 billion. The Future Fund is worth £500m and will support high-growth companies impacted by the crisis and the £750m Innovate UK fund will offer grants and loans to SMEs involved in research, development and innovation.

The Future Fund 

The Future Fund will offer £250m of public funded loans to high-growth companies across the UK during the crisis, matched with £250m of private funding. Launching in early May 2020, the British Business Bank-delivered programme shall make loans of between £125,000 and £5 million to eligible businesses with private investors at least matching the government commitment. These 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. Further details of the fund are expected to be announced shortly. The government is committing an initial £250 million in funding towards the scheme, which will initially be open until the end of September. The scale of the fund will be kept under review.

£750m Innovation Fund

From mid-May onwards, Innovate UK (the national innovation support agency and part of the broader UK Research and Innovation (UKRI)) will have a further £750m to distribute to small and medium sized enterprises engaged in R&D through its grants and loan scheme. The £750 million of targeted support for the most R&D intensive small and medium size firms will be available.  Innovate UK will accelerate up to £200 million of grant and loan payments for its 2,500 existing customers on an opt-in basis. An extra £550 million will also be made available to increase support for existing customers and £175,000 of support will be offered to around 1,200 firms not currently in receipt of Innovate UK funding by means (it is understood) of an open call. The first payments will be made by mid-May. Further details are expected in due course.

Sir Mark Walport, Chief Executive of UK Research and Innovation, said: “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.”

Ian Campbell, Executive Chair of Innovate UK said: “We are keen to help innovative companies in these challenging times through our established, well-understood and successful grant and loans programmes to drive development of new products and services through intensive R&D. We are committed to delivering this rapidly to ensure we support businesses with the support they need.”
This package builds on the government’s existing support for innovative, high-growth firms including the £2.5 billion British Patient Capital fund, the upcoming £200 million Life Sciences Investment Programme, internationally competitive R&D tax reliefs and our major commitments to increase public R&D spending to £22 billion by 2024-25.

Conclusion 

This latest announcement further underlines the Government's strategy to see out the Coronavirus pandemic by investing large sums of public money supporting businesses.  In this case, the Government has chosen to deliver the new funds through organisations with experience of handling public funds, therefore it is reasonable to expect that this much needed funding will be reaching businesses soon. The full terms and conditions for funding will be made available soon but they are likely to be similar to existing Coronavirus support funds, hence will include State aid checks at the very least in accordance with the EU's Temporary Framework and the UK's so-called "umbrella" scheme adopted to enable public authorities to avail of the special exemptions afforded by the Temporary Framework.

Please get in touch with the team below if you require any further guidance on this topic.

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