The UK Government has announced plans for a £1.25 billion coronavirus package to protect innovative UK businesses.
SMEs focusing on research and development (“R&D”) will benefit from £750m of support through a mix of grants and loans through Innovate UK.
The package also includes a new £500m co-investment fund, the Future Fund (the “Fund”), designed to support high-growth companies (including start-ups and early stage businesses) that are struggling to survive due to the COVID-19 outbreak and have so far been unable to access existing support schemes.
Additionally, the Scottish Government has announced a new £100m fund to provide financial support to “viable micro and SME businesses” and the newly self-employed who are suffering COVID-related financial distress. This fund will be managed through local authorities and enterprise agencies and is aimed at businesses who are ineligible for other Scottish Government or UK Government schemes (it is hoped – but not yet confirmed – that this will include businesses who fail to qualify for the above UK Government schemes). The Scottish Government has said that applications for this new fund will be available by the end of April.
Innovate UK Grants and Loans
- Innovate UK is anticipated to allocate £200m of grants and loans to their existing 2,500 customers on an opt-in basis and it is expected that this will be in similar amounts to previous funding.
- A further £550m is to be allocated to support a mix of existing customers and £175k of support will be offered to around 1,200 new firms, with the first payments being made by mid-May.
- Further details are required from the Government on whether these grants and loans are only to be used for R&D funding or whether they can be used for broader working capital purposes.
Scottish Government Support
- The Scottish Government’s £100m fund to provide support to self-employed and SMEs will be broken into three separate funds, as follows:
- £34 million Newly Self-Employed Hardship Fund, managed by Local Authorities, will be allocated to the newly self-employed facing hardship through £2,000 grants.
- £20 million Creative, Tourism & Hospitality Enterprises Hardship Fund, managed by the Enterprise Agencies in partnership with Creative Scotland and VisitScotland for creative, tourism and hospitality companies not in receipt of business rates relief.
- £45 million Pivotal Enterprise Resilience Fund managed by the Enterprise Agencies for vulnerable SME firms who are vital to the local or national economic foundations of Scotland.
- The Scottish Government is also providing £1 million to top up Creative Scotland’s Bridging Bursaries in the not-for-profit sector.
*Updated 20 May 2020*
See full blog regarding the details of the Future Fund here.
If you have any questions regarding these support packages, please contact Brian McMurray, Corporate Finance Partner at AAB.