Wednesday saw the launch of The Future Fund, the Government’s latest initiative to help businesses navigate the current crisis. The Government has partnered with The British Bank on The Future Fund Convertible Loan Notes (its full name) and the application portal opened on Wednesday. With £250m available, the Future Fund is aimed at start-ups, scale-up and venture-backed businesses that have not been eligible for other schemes. Since the original announcement and Term sheet a month ago, three key changes have been made to the scheme which applicants need to be aware of:
• Applications need to be made by the key investor. This is not necessarily the largest investor, but they need to have invested a minimum of £12,500
• Applicants MUST appoint a solicitor (more on this below)
• The system is now working on a first-come, first-served basis, so getting your application in early is crucial
The Future Fund is not intended as a funding source, rather a bridging loan and its terms state that it should not constitute more than 50% of bridged funding to the business, with the other 50% coming from investors. In addition, the terms of the loan are not lean, with an 8% interest rate and a minimum 20% discounted price-point for noteholders when their Future Fund monies convert into shares. When or if the loan is repaid, it will attract a premium for the Government and matched investor.
Appointing a solicitor now forms part of the application criteria, both to help applicants navigate the ‘legalese’ and of course to ensure legal compliance. Your solicitor will be required to work through company documentation to ensure there are no legal issues to navigate and the loan documents, the terms of which are bespoke to the scheme.
We talked about eligibility in our previous post, but as a reminder businesses are eligible if:
• It is UK-incorporated – if your business is part of a corporate group, only the parent company is eligible
• It has raised at least £250,000 in equity investment from third-party investors in the last 5 years
• none of its shares are traded on a regulated market, multilateral trading facility or other listing venue
• it was incorporated on or before 31 December 2019
• it has either a minimum of 50% employees based in the UK OR have a minimum of 50% of revenues from UK sales
This scheme is already proving to be extremely popular, and getting in early is crucial. For help and advice on applying for the scheme, get in touch on 01274 588115 or email@smithbutler.co.uk.