Government launches £1.25bn funding for start-ups and SMEs affected by COVID-19

The Government has launched a package of £1.25 billion to help aid start-ups and research intensive SMEs to remain viable through the coronavirus pandemic.

The Treasury and the Department for Business, Energy & Industrial Strategy (BEIS) said the package includes a £500m Future Fund investment for high-growth companies impacted by the crisis, made up of funding from government and the private sector.

SMEs focusing on research and development will also benefit from £750 million of grants and loans.

The Future Fund will be open to start-up companies, like those in the transport and infrastructure sector, that have themselves previously raised at least £250,000 of private investment in the last five years.

Applications will be open in May until September and funds will be delivered through the British Business Bank.

Each qualifying start-up could receive between £125,000 and £5 million and the scale of the fund will be kept under review if more cash is needed.

The Government is also offering up to £750m in funding for “the most R&D intensive small and medium size firms” and this is separate to the Future Fund.

This funding will be made available through Innovate UK’s existing grants and loan scheme.

Innovate UK, the national innovation agency, will accelerate up to £200 million of grant and loan payments for its 2,500 existing Innovate UK 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. The first payments will be made by mid-May.

Innovate UK is also offering £20m to companies working on transport and logistics projects help build UK resilience following the coronavirus outbreak.

Chancellor of the Exchequer Rishi Sunak, said: "Britain is a global leader when it comes to innovation.

"Our start-ups and businesses driving research and development are one of our great economic strengths, and will help power our growth out of the coronavirus crisis.

"This new, world-leading fund will mean they can access the capital they need at this difficult time, ensuring dynamic, fast-growing firms across all sectors will be able to continue to create new ideas and spread prosperity."

Suren Thiru, British Chambers of Commerce head of economics, said: “The Future Fund will help provide urgently needed support for many of our most innovative and fast-growing businesses around the UK, as we have urged.

"The fund fills an important gap in existing government support and could make a real difference to entrepreneurial firms navigating challenging circumstances. It’s crucial that this enhanced support reaches companies in difficulty as quickly as possible.”