Future Fund approves £55.9m of Convertible Loans
- First 53 companies approved for Future Fund convertible loans valued £55.9m
- 533 companies, to date, have applied to the Future Fund
Today the British Business Bank published new statistics that show £55.9m worth of convertible loans have been approved for 53 companies so far since the Future Fund opened for applications on 20 May. This sum has been matched by at least the same amount from third-party investors.
Operating on a commercial basis, the Future Fund will deliver an initial commitment of £250m of new government funding which will be unlocked by additional third-party investment on a match funded basis, creating a bridge to the next equity funding round for innovative companies with good potential. To date, 53 companies have received Convertible Loan Agreements for signature. The government has made an initial £250 million available for investment through the scheme and will consider increasing this if needed.
The purpose of the Future Fund is to support innovative UK companies with good potential, that typically rely on equity investment and are currently affected by Covid-19. Until now these companies have been unable to access other government business support programmes because they are either pre-revenue or pre-profit. The Future Fund will help these companies through the current period of economic disruption and the recovery, so they are able to continue their growth trajectory and reach their full economic potential.
The Future Fund opened for applications on 20 May 2020. Application processes are expected to take a minimum of 21 days from initial application to funding being awarded, providing applicants provide all the information required.
Keith Morgan, CEO, British Business Bank said: “Since the Chancellor announced the Future Fund on 20 April, the British Business Bank has delivered an open access online transaction process to issue convertible loan notes. This rapid build has enabled businesses to gain access to finance through the scheme quickly and efficiently. The scheme has been extremely popular and saw applications worth £515m on day one. We are extremely pleased to see the first businesses receive their agreements.”
|Data up to close of business||Total number of applications||Number of convertible loans approved||Value of convertible loans approved|
- The Future Fund opened for applications on 20 May 2020
- Provided that applicants provide the information required during the application process in a timely manner, it is expected that the process will take a minimum of 21 days from initial application to funding being made available
- Convertible loans are reported as approved at the point the Convertible Loan Agreement document is issued by Future Fund for signature
- The time to which applicants subsequently receive funds will depend on the speed with which they complete the documentation
- Figures shown were shared directly with HMT on 08 June 2020
The British Business Bank Team at MHP Communications
020 3128 8589
Notes to Editors
Covid-19 Loan Schemes
The Future Fund will support the UK’s innovative businesses currently affected by Covid-19. These businesses have been unable to access other government business support programmes, such as CBILS, because they are either pre-revenue or pre-profit and typically rely on equity investment. The scheme will deliver an initial commitment of £250m of new government funding through convertible loan notes which will be unlocked by private investment on a match funded basis. The government scheme, which will be developed in partnership with the British Business Bank with the intention of launching for applications in May, will initially be open until the end of September.
Bounce Back Loans Scheme (BBLS)
BBLS is a demand-led scheme offering lending that targets small and micro businesses, providing loans from £2k up to 25% of the business’ turnover with a maximum loan of £50k. Providing lenders with a 100% government-backed guarantee and standardising the application form is expected to lead to a faster process with many loans becoming available within days. The Bounce Back Loans Scheme enables businesses to obtain a six-year term loan at a government set interest rate of 2.5% a year. The government will cover interest payable in the first year.
Coronavirus Business Interruption Loans Scheme (CBILS)
CBILS is a demand-led scheme offering lending to smaller businesses with turnover of up to £45m. Invoice finance and asset finance facilities are available from £1k to £5m, while term loans and revolving credit facilities are available from £50k to £5m (the lower limit for these has increased from £1k following the introduction of BBLS). The government makes a payment to cover interest and lender-levied fees under CBILS for the first 12 months. Following the launch of the Bounce Back Loans Scheme, CBILS will no longer be available for new loans and revolving credit facilities (overdrafts) of £50,001 or less, but remains available for Asset and Invoice Finance facilities below £50,001.
Coronavirus Large Business Interruption Loans Scheme (CLBILS)
CLBILS is a demand led scheme targeted at larger businesses with a turnover of more than £45m. It offers term loans, revolving credit facilities, invoice finance and asset finance. The maximum amount available through CLBILS to a borrower and its group has been increased from £50m to £200m. Term loans and revolving credit facilities over £50m will be offered by CLBILS lenders which have secured additional accreditation. The maximum size for invoice finance and asset finance facilities remains at £50m.
Companies borrowing more than £50m through CLBILS will be subject to further restrictions on dividend payments, senior pay and share buy-backs during the period of the loan.
About the British Business Bank
The British Business Bank is the UK government’s economic development bank. Established in November 2014, its mission is to make finance markets for smaller businesses work more effectively, enabling those businesses to prosper, grow and build UK economic activity. Its remit is to design, deliver and efficiently manage UK-wide smaller business access to finance programmes for the UK government.
The British Business Bank programmes are supporting more than £7.2bn of finance to over 93,000 smaller businesses (as at end of September 2019).
As well as increasing both supply and diversity of finance for UK smaller businesses through its programmes, the Bank works to raise awareness of the finance options available to smaller businesses:
- The Business Finance Guide (published in partnership with the ICAEW and a further 21 business and finance organisations) impartially sets out the range of finance options available to businesses at all stages – from start-ups to SMEs and growing mid-sized companies. Businesses can take the interactive journey at thebusinessfinanceguide.co.uk.
- The new British Business Bank Finance Hub provides independent and impartial information to high-growth businesses about their finance options, featuring short films, expert guides, checklists and articles from finance providers to help make their application a success. The new site also features case studies and learnings from real businesses to guide businesses through the process of applying for growth finance.
As the holding company of the group operating under the trading name of British Business Bank, British Business Bank plc is wholly owned by HM government and is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). The British Business Bank operates under its own brand name through a number of subsidiaries, none of which are authorised and regulated by the FCA.
British Business Bank plc and its principal operating subsidiaries are not banking institutions and do not operate as such. A complete legal structure chart for British Business Bank plc and its subsidiaries can be found on the British Business Bank plc website.