Forget the Future Fund, try these other 5 government funding options instead
The government-backed ‘Future Fund’ has garnered quite a bit of attention lately, with 155 companies approved as of last week, out of 577 applicants. The program, which started on May 20th, was designed to help entrepreneurs mitigate the financial impact of the pandemic.
So far, £146 million have been made available in the form of unsecured convertible loans.
While the measure has proven effective in supporting some pre-revenue or pre-profit ventures currently affected by Covid-19, it has come under fire for not meeting S/EIS requirements, as well as focusing too heavily on VCs and potentially increasing the diversity gap already plaguing the sector. Two key requirements have come under fire:
- Funds must be matched by private investment
- Applicant companies must have raised £250k within the past 5 years
According to a report by the British Business Bank, The UK business angel market relies heavily on EIS and SEIS with eighty-six per cent of angel investors investing in small businesses to make use of the schemes. By discounting angels, the Future Fund gives a leg up to startups vetted by VCs and large funds and leaves a large number of entrepreneurs out of the equation.
Furthermore, voices in the community argue that, since any company that hasn’t raised 250k in the last 5 years is excluded from applying, the measure will only widen the private investment gap for underrepresented founders.
While the future fund has undoubtedly helped a lot of businesses, it isn’t right for everyone. For those looking for other options, here are 6 other government funding options to fund your business through the COVID-19 pandemic:
The Bounce Back Loan scheme (BBLS)
The Bounce Back Loan scheme offers businesses £2k – £50k loans based on 25% turnover, with no repayments for the first year. The maximum loan amount is £50,000, and you benefit from fixed interest fees at 2.5% per annum.
In order to be eligible, businesses must not be in bankruptcy or liquidation, must have been negatively impacted by the pandemic, operate in the UK, and not use the Coronavirus Business Interruption Loan Scheme (CBILS) or the Bank of England’s Covid Corporate Financing Facility Scheme (CCFF). Only businesses deriving more than 50% of their income from trading can apply.
Retail, Hospitality and Leisure Grant Fund
Businesses in the retail, hospitality and leisure sector may receive cash grants of up to £25. You may apply if you own property in the UK and if it’s currently used as a shop, restaurant, cafe, drinking establishment, cinema, live music venue, hotel, other guest and boarding premise or as self-catering accommodation.
If the property has a rateable value of up to £15,000 you can receive a grant of £10,000. If the rateable value is over £15,000 and less than £51,000 you can receive a grant of £25,000.
Applications are submitted through your local council. Check eligibility here.
Coronavirus Business Interruption Loan Scheme
You can receive loans up to £5 million, with 80% of the finance to the lender guaranteed. The government will cover interest and any fees for the first 12 months.
You may apply for the scheme if your business is based in the UK and has an annual turnover of up to £45 million. You’ll need to prove you had a viable business which has been adversely impacted by the pandemic. You’ll need to pay back the loan in up to 3 years for overdrafts and invoice finance facilities and up to 6 years, for loans and asset finance facilities.
Apply through a lender.
The Small Business Grant Fund (SBGF)
£10k grants are available for small and rural businesses in England. In order to apply, you have to be occupying property and have been eligible for small business rate relief (including tapered relief) or rural rate relief on 11 March 2020.
British Business Investments and Startup Funding Club
British Business Investments, a subsidiary of the British Business Bank has made £10m in funding available through its Startup Funding Club (SFC). The SFC has previously invested in 28 companies across the UK, in sectors ranging from healthcare and life sciences to new materials. The commitment falls under its £100m Regional Angels Programme, and companies need to submit enquiries through angel networks in order to apply.
If you’re looking to raise equity finance as part of your fundraise, Envestors can help you get investment ready and in front of investors