There has been numerous financial packages already announced by HM Treasury that are being made available to UK businesses as they struggle to cope with the coronavirus outbreak. This week the Chancellor has just unveiled further support targeted at high-growth businesses and SMEs focused on Research and Development (R&D) amounting to £1.25 billion. We covered The Future Fund announcement here.
Who is the package aimed at?
The package is aimed to protect businesses in some of the most dynamic sectors of the UK economy covering tech through to life sciences. This will allow them to continue to develop innovative products and help power vital UK growth once lockdown restrictions start to ease. It will also provide a vital cashflow boost for many smaller businesses that operate at the forefront of technological development and innovation in this country.
The comprehensive package includes a new £500 million loan scheme for high-growth firms, to be known as the Future Fund, and £750 million of targeted support covering both grants and loans for small and medium sized businesses that are focused on R&D.
What benefit will this have for businesses?
The Future Fund is seen as a lifeline to ensure high-growth companies across the UK receive the investment they need to continue their work during the crisis. The support will be delivered in partnership with the British Business Bank which launches in May providing UK based companies with between £125,000 and £5 million from the government and will be matched on a £ for £ basis from private investors. These loans will automatically convert into equity on the company’s next qualifying funding round or at the end of the loan if unpaid. Eligibility requires businesses to be unlisted UK registered companies who have previously raised at least £250,000 by way of equity funding from third party investors in the previous five years. The government’s share of the financial commitment (£250 million) will be open until 30 September.
The £750 million support package aimed at R&D focused SMEs will be delivered through Innovate UK’s grants and loan scheme. Innovate UK will accelerate up to £200 million of grants and loans to its 2,500 existing UK customers on an opt-in basis. The remaining £550 million will also be made available to support existing customers with up to £175,000 of support being offered to over 1,000 firms not currently in receipt of Innovate UK funding. First payments are expected to be made by mid-May.
Both packages seek to build on the government’s existing commitment to turbo-charge innovative and high-growth firms so as to ensure UK business remains competitive internationally and follows the March Budget commitments to increase R&D spending to £22 billion by 2024-25.
If you need advice or assistance with Research & Development the Mercer & Hole team are here to support you and your business, please contact us if you require any assistance.