The UK Government has extended the application deadline for the Treasury’s programme of Covid-19 business support loans, including the Future Fund.
- Chancellor Rishi Sunak announces "pay as you grow" scheme
- Interest-only periods of up to six months and payment holidays
- Ability to extend the length of loans from a maximum of six years to ten years
- Future Fund has provided £720m in loans to date
Applications for all four loan schemes – the Coronavirus Business Interruption Loan Scheme (CBILS), the Coronavirus Large Business Interruption Loan Scheme (CLBILS), the Bounce Back Loan Scheme (BBLS) and the Future Fund – have all had their deadlines extended until 30 November 2020.
Changes to loan repayments
Chancellor Rishi Sunak also announced a "pay as you grow" scheme for businesses which took government guaranteed loans during the crisis. For businesses that took a Bounce Back loan, the repayment has been extended from six years to ten.
Interest-only periods of up to six months and payment holidays will also be available to businesses if they are "in real trouble" said Sunak, and their credit ratings will be unaffected.
CBILS lenders will also be given the ability to extend the length of loans from a maximum of six years to ten years if it will help businesses to repay the loan.
More than one million small businesses have received a collective £38bn through the Bounce Back Loan scheme, while more than 60,000 small to medium-sized businesses have taken out CBILs.
Sunak said the government is working on a successor business loan plan that will begin in January.
The Future Fund was launched in May to help startups in sectors such as tech and life sciences. It provides convertible government loans worth between £125,000 and £5m to companies that have previously raised at least £250,000 of equity investments, to be matched by private investors.
The government initially committed £250m in loans as part of a £500m fund that was equally shouldered by private investors. Due to the popularity of the fund more capital was made available.
Earlier this month, the British Business Bank revealed that the fund has provided £720m worth of convertible loans approved for 711 companies since the fund opened for applications on 20 May.
Data released by the British Business Bank also shows that 82% of funding has gone to firms with mixed-gender management teams, and 64% to businesses with mixed-ethnicity management.
Since the launch of the Future Fund more than 30 venture capital firms and angel groups have become signatories to the Government’s Investing in Women Code, alongside the Future Fund.
More than 40% of funding approved to companies for the fund have their headquarters located outside of London.
Juliet Rogan, Head of High Growth and Entrepreneurs Coverage at Barclays, says the Future Fund has had really positive feedback from investors and entrepreneurs.
“It has been effective at unlocking private capital through match funding, so it is really positive to see the extension of the fund to the end of November to enable more companies to access it. “It is also great to see the focus on the diversity of deployment of this capital as it is important to ensure that it is available to the best companies regardless of location, gender or ethnicity.”
This is our interpretation of the announcement made by the Chancellor and we recommend that you carry out your own independent research to see how this new scheme affects you and your business’s individual circumstances.