Future Fund: Breakthrough

Chancellor Rishi Sunak has launched the sequel to last year’s Future Fund: Breakthrough (FF:B). It’s a new £375m UK-wide scheme which will encourage private investors to co-invest with the government in high-growth, innovative firms.

The name Future Fund is a bit misleading. Unlike the original scheme, which we campaigned for through the Save our Startups campaign, this does not provide matched Convertible Loan Notes. Breakthrough is a targeted co-investment fund aimed at growth stage innovative, R&D-intensive UK companies.

Research and development intensive businesses receiving an investment round of £30m or more will be able to access co-investment from British Patient Capital. The maximum stake the FF:B will take is 30% so the minimum amount of private investment you need to receive is £21m.

To qualify, businesses need to have received at least £5m in prior investment and be R&D intensive.

This means the company must be carrying out R&D activity in the UK by meeting all three of the following criteria:

1. R&D spending (as defined by pre-set accounting rules) must have been at least 10% of total operational cost base on average over the last 3 years or at least 15% in one of the past 3 years.

2. Company is developing defensible intellectual property in the UK which they expect to be the company’s main revenue source.

3. Company intends that 20% or more employees will be carrying out research for at least 3 years from the date of investment, in roles that require a relevant master’s degree or higher.

Unlike the original Future Fund where investors could self-certify, there are more controls on who can invest as a lead investor.

The lead investor can be:

• Any fund managed or advised by an FCA (or equivalent) authorised firm with private sector investment making up greater than 50% of the total fund size and who is currently managing an active fund greater than £100m. The fund must have raised capital from at least three independent LPs (or equivalent) and have a written investment strategy that aligns with the investment strategy of FF:B;

• Any fund or investment vehicle with an appropriate investment strategy, managed or advised by a fund manager which has applied to and obtained an investment from a member of the British Business Bank group. For example, those supported by British Patient Capital and by the British Business Bank’s Enterprise Capital Funds programme.

• Other investment vehicles with a minimum of £100m of investment capital, a broad range of independent investors (at least 3), a demonstrable track record and an appropriate investment strategy where these have been approved by FF:B

Tax-advantaged investors will be able to invest as part of a syndicate but they will not be able to be the lead investor.

You can find out more information about the fund here.

Influencing the Government

Over the past couple weeks, we have been unpacking the announcements from the budget. We’ve already looked at the new Help to Grow Scheme, the new super-deduction and changes to the immigration system in previous posts. But we also want to explain the issues where entrepreneurs can influence the government’s thinking.

On that note, the Government published a range of consultations and reports on a range of issues to do with taxation today. You can see the full list here.

This update is slightly different to our usual updates. In this post, we’ll highlight a range of reviews and consultations announced by the Chancellor at the Budget and on what’s been dubbed ‘Tax Day’. If entrepreneurs respond to the government’s calls for evidence then it is more likely that we can get policy changed for the better.

R&D Tax Credits

Over the past two years, we have been arguing that the scope of the R&D Tax Credit should be expanded to cover data and cloud computing. So we welcome the news that a new consultation announced at the budget will look at the following areas:

• How the two R&D relief schemes support R&D in the UK, including how they operate, how they interact with the way modern R&D is done, and the main differences in design between them.

• Whether the schemes should be amended to remain internationally competitive and keep the UK at the cutting edge of innovation

• Whether the definition of R&D and the scope of what qualifies for relief remain fit for purpose.

• Whether current rates of relief, and the difference in rates between RDEC and the SME scheme, remain appropriate.

As former Prime Minister Theresa May pointed out in Parliament recently, there have been a range of reviews on R&D but as of yet, little action has been taken. Hopefully, this time will be different.

The Government wants to hear from “firms that undertake R&D, or might consider doing so in future”.

It is asking questions such as: 

• Do you think R&D tax reliefs could better incentivise R&D with specific social value, for example developing green technology?

• Could R&D tax reliefs be used to disincentivise R&D in certain fields?

• Are there any other areas of qualifying expenditure that should be included within the reliefs? How would this influence your investment decisions?

You can read the full consultation document here and if you want to send in a submission you can send it to RDTaxReliefs@hmtreasury.gov.uk

The deadline for submission is 2nd June.

Stock Options

The Enterprise Management Incentive allows startups to benefit from tax relief when they grant their employees stock options. It’s a great system for empowering employees and helps the UK remain internationally competitive for high skilled workers.

However, while the UK’s scheme at one point was a world-beater ,other countries have caught up. As a result a number of organisations, including ourselves, have argued that we need to expand the scheme so more scale-ups can benefit. We set out the reasons why this would be good for the UK’s startup ecosystem in our Startup Manifesto.

It’s welcome then that the Government is reviewing the scheme “to ensure it provides support for high-growth companies to recruit and retain the best talent so they can scale up effectively, and examining whether more companies should be able to access the scheme.”

They’ve launched a Call for Evidence which you can read the terms of here. If you’ve used the scheme or want to see it expanded then you can email a submission here.

Pension fund investment into VCs

Pension funds contribute 65% of the capital in the US VC market and 18% in Europe, but just 12% in the UK. There has been serious talk over the past five years of finding a way to get more pension funds to invest into venture capital. One of the barriers we identified in our report Unlocking Growth was the Pension Charge Cap. It’s designed to protect pension holders from being overcharged on active management fees, but has had the unintended effect of making it difficult for pension funds to invest in venture capital as VC funds require hands-on management.

It’s good that the Government has announced that this will be reviewed in the coming months. If you are thinking of writing a submission, you can see the full terms of the consultation here.

The Call for Evidence closes on 16th April.

Timely Payment

Should the tax payments for companies and individuals outside existing regular payment systems such as PAYE become more frequent? As part of the Government’s new 10 year tax administration strategy, they have just opened a call for evidence.

It asks questions such as:

• Do you agree that if there is to be a more frequent tax payment regime, it should generally be based on current year liability?

• What are your views on using digital solutions to facilitate in-year calculation, and what and how could specific groups be affected negatively by this?

• Do you have any initial views on the benefits and challenges of monthly, quarterly, or other, payment frequency?

• What methods do taxpayers use to budget for their tax bill?

If you want to give evidence you can see the full terms of the consultation here.

It closes on 13th July.

If there are any other consultations you are interested in or want to work with us on a submission for, then please get in touch.

Changes to the Visa System

The government launched a new immigration system at the start of December last year. It included the introduction of the reformed Tier 2 (General) visa route, now known as the Skilled Worker visa, whereby points are awarded for skills, professions, salaries and qualifications.

To qualify for the Skilled Worker visa a worker must obtain 70 points, 50 of which are mandatory points and the remaining 20 points can be accumulated from tradeable points. The introduction of this visa route saw the abolition of the bureaucratic Resident Labour Market Test, which means that employers are no longer required to advertise the job for 28 days to prove to the Home Office that they are unable to fill the vacancy from the settled UK workforce.

Also, the minimum salary threshold for Skilled Worker jobs has been reduced to £25,600 from the previous requirement of £30,000 and the skill level of the job reduced from RQF level 6 (Degree level) to RQF level 3 roles (A level).

As well as the Skilled Worker Visa, a range of new visas have been announced. In this Policy Update, we explain what they mean for entrepreneurs.

Global Talent visa

Previously known as the Tier 1 (Exceptional Talent) visa, the Global Talent visa was introduced in February 2020 and created to attract  “a leader or potential leader” in the fields of academia or research; arts and culture; and digital technology.
 
Under this route, successful applicants will be granted permission to work without any restrictions if they are endorsed by a specialist endorsing body.

Graduate visa

The Graduate visa will launch on 1st July 2021 and will allow international students to undertake full-time employment, at any skill level, without requiring sponsorship from employers when they graduate. International students will be awarded a 2 or 3 year visa under this route depending on the level of their qualification.

Intra-Company Transfer

Previously known as the Tier 2 (Intra-Company Transfer) visa, this visa route allows migrants to come to or stay in the UK to do an eligible job at their employer’s UK branch. The biggest change within this visa route is that those migrants who are paid £73,900 or over can stay in the UK for up to 9 years, which is a reduction from the £120,000 high earner salary threshold from the Tier 2 (Intra-company Transfer). However, this visa category does not lead to indefinite leave to remain (ILR).

Hong Kong British National (Overseas) Visa
 
There is also a new visa route for British Nationals overseas citizens and their families. This visa will allow applicants to live, work and study in the UK. The applicant must hold a BN(O) passport  to apply for this visa and are also allowed to bring their dependent family members into the UK via this visa route.
 
All other visa routes have stayed the same with the exception of new names for certain visa categories and, in some cases, minor changes to the rules.

Changes announced at the Budget
 
In order to advance innovation and to support UK jobs and growth, the Chancellor recently announced additional measures that will be adopted to attract and retain the most highly skilled, globally mobile talent from around the world. To achieve this vision, the following changes have been announced.

• The introduction of an “elite” points based visa expected to launch by March 2022. Within this visa there will be a ‘scaleup’ stream, enabling those with a job offer from a recognised UK scale-up to qualify for a fast-track visa. While it is not yet clear if scaleups will be classed as the companies as recognised by The Scaleup Institute, it is understood that the elite visa will not require sponsorship or a third party endorsement.
  

• The reform of the Global Talent visa will include allowing holders of international prizes and winners of scholarships and programmes for early promise to automatically qualify for this visa route.
  

• The Innovator visa, which replaced the Entrepreneur visa in 2019, will be reviewed. This is welcome as it has failed to take off – effectively shutting the UK's doors to entrepreneurs. It is understood that the reforms to this visa route will aim to make it easier for entrepreneurs with innovative businesses to obtain a visa compared to the cumbersome process that exists at the moment.
  

• A Global Business Mobility visa will be launched by spring 2022 for overseas businesses to establish a presence or transfer staff to the UK. As per Free Movement’s blog, this visa sounds like it will be a revamp of the Representative of an Overseas Business visa route.
  

• There are plans to promote and expand the Global Entrepreneur Programme to market the UK’s visa offering and building an overseas network of talent.

The new immigration system and the proposed reforms as per the Chancellor's Budget 2021 announcements are a huge step up from the past years’ immigration system. These new routes and changes offer enhanced flexibility for both migrants and UK employers – although it should be noted that the UKVI fees are very high and many employers and migrants will not be able to use the new and improved visa routes simply because the costs of immigration (sponsorship, visa fees, IHS, skills charge etc.) amount to thousands of pounds for a single migrant, let alone a family looking to migrate to the UK.

For more information on the UK immigration system and visa routes, please contact Zenia Chopra.

Corporation Tax & The Super-Deduction

One of the most eye-catching announcements at the Budget was the newly announced ‘super-deduction’ for investment in new plants and machinery. Rishi Sunak hyped it as the biggest business tax cut in history. But what does it mean for businesses and will it cancel out the impact of raising the Corporation Tax rate to 25%?

In this policy update, we explain how new changes to Corporation Tax will affect your business.

19% Small Profits Rate and 25% Main Rate

In order to cushion the blow of a steep 6% rise in Corporation Tax at the Budget, the Chancellor announced a separate Small Profits Rate of 19% for profits under £50,000. To avoid creating an incentive to artificially reduce taxable profits to get under the £50,000 threshold, there is a taper. Profits between £50,000 and £250,000 will be paid at main rate but with extra relief designed to avoid a cliff edge effect where the tax rate on a marginal pound is greater than 100%.

This was somewhat of a surprise announcement. As though it provides some support to SMEs, it is poorly targeted and in the past has been a target for abuse.

To avoid raising taxes during an uncertain recovery period, the main rate tax rise is delayed till the financial year beginning April 2023.

Loss carry-backs

Many businesses will have run up large losses over the last year. The Corporation Tax system is designed to allow businesses to even out their losses and profits over a number of years. For instance, you can carry forward up to £5m (and 50% above that) of your losses each year. So if you run a loss one year, you can offset it against your profits the next. However, this tax relief may take years to come if the recovery is sluggish.

As a result, the Chancellor announced a three-year carry back option. You can now offset last year’s losses against the three tax years before it and receive a rebate from the exchequer. Previously, you were only able to do this for one year.

There is a limit on the total losses you can carry back over the full three years. They are capped at £2,000,000.

If you are only seeking to carry back losses worth £200,000 or less you can submit it outside your company return. This should be helpful if you’re facing immediate liquidity issues.

This is a temporary measure and will only apply for tax years 2020/2021 and 2021/2022.

The super-deduction

The tax system treats day-to-day business spending differently to investment in long-lived assets such as machinery and buildings. While day-to-day spending can be expensed up front, investments in plants and machinery are written-off over a number of years. Economic research from Oxford University suggests that treating capital spending the same as day-to-day spending would lead to significantly more investment.

Before the budget SMEs could fully write-off all investments in new plants and machinery up to a limit of £1m. This is known as the Annual Investment Allowance. However, the newly announced super-deduction goes further. It is set at a rate of 130%, so that for every £1 your business invests you can deduct £1.30 from your taxable income. This could allow you to reduce their corporation tax bill by as much as 25p per £1 you invest.

The super-deduction is temporary and will last for the two years before the rate hike in 2023. It is set at a rate of 130% to reduce the incentive to delay investments until the rate rises when losses will, in effect, be worth more. 130% roughly corresponds to 100% at 25% so in practice it should have a similar impact to making the annual investment allowance unlimited. It is not clear if capital allowances will be boosted in 2023, so there’s an incentive for many businesses to pull investments forward.

The government has yet to fully publish its anti-avoidance provisions but it is likely that they will be vigilant to prevent businesses from rebadging day-to-day spending as annual investment.

Only investments in qualifying plants and machinery purchased after April 2021 will qualify for the super-deduction. Investments that would usually be included in the special-rate pool such as thermal insulation and lighting systems qualify for a 50% allowance instead, allowing the investment to be fully expensed over two years.

There is some uncertainty over whether intangible investments qualify. Spending that currently falls under annual profit-and-loss e.g. cloud software subscriptions or annual web-hosting fees, would not. Investment in long-lived intangible assets such as building a new piece of software or website may count. Under the status quo, companies make an election under s815 CTA 2009 to exclude it from the intangibles regime and instead have it treated as a plant or machine in order to qualify for Annual Investment Allowance relief. You can read more about this here.

In theory, you might be able to do the same for the super-deduction, but the guidance isn’t clear at the moment.

We will keep you posted on all updates relating to the super-deduction as these issues are clarified.

Help to Grow

Over this week, we will be unpacking some of the key announcements from last week’s Budget. In the next few days, we will cover changes to the immigration system that might make it easier for you to hire foreign staff, the new ‘super-deduction’ designed to boost business investment, and a range of newly announced reviews and consultations on future policy changes.

But first, we’re looking at Help to Grow, a new scheme to help SMEs improve their management skills and adopt better digital tech. Past research from The Entrepreneurs Network has highlighted the importance of both to improve productivity levels in the UK. As we noted in our response to the Budget announcement:

“Management practices explain almost a third of the differences in productivity between and within countries. And pre-pandemic data suggests that if the UK’s 1.1m micro businesses doubled their uptake of key digital technologies, it would lead to a £4,050 average productivity for the millions of workers they employ.”

We are pleased to say that the new scheme borrows from many of the recommendations in our reports Management Matters and Upgrade.

In this Policy Update, we’ll break down the new Help to Grow scheme and explain how you can benefit from discounted management training from business schools and discounted software.

Help to Grow: Management

The management side of Help to Grow is a 12-week programme delivered by business schools across the UK. It is for the key decision makers in SMEs (between 5 and 249 employees) which have been operating for over a year. There are 30,000 places available over the next three years and the first course starts in June. It isn’t free, but it is 90% subsidised and costs £750. In other words, you are getting a course that business schools would usually charge £7,500 for.

The programme is a mix of eight two hour online sessions, four practical case study workshops, one-to-one support from a mentor who will help you develop a business growth plan, and peer networking, including peer group calls that give you the opportunity to share experiences with a small group of other small business leaders. There will also be access to an Alumni Program, featuring business clinics and events with inspirational speakers.

Help to Grow: Digital

Starting in Autumn, you will be able to get free, impartial advice on new technology that could boost your SMEs productivity. Eligible businesses, that is businesses which employ between 5 and 249 employees and have been trading for over a year, will be able to get vouchers worth up to 50% off first-time purchases of approved software, worth up to £5,000.
It isn’t clear which software will qualify, but the government states that qualifying software will help build customer relationships and increase sales, make the most of selling online, and manage their accountants and finances digitally.

In other words, CRM software, e-commerce tools, and cloud-based accounting services should all be covered. But it seems unlikely that design software or AWS credit will be included.

Some have raised concerns that startups who sell software as a service (SaaS) products may not benefit from the vouchers compared to established tech businesses such as Salesforce. Over the coming months, we will make the case to the government that the scheme should give SMEs a wide choice of products and services.

The scheme appears less developed than the management scheme, but you can express your interest here to receive updates when more details are available.

Support for Lockdown Three

Welcome to our latest Policy Update. In these updates, The Entrepreneurs Network focuses on recent policy development and sets out (nearly) everything an entrepreneur needs to know about the topic. If you’re joining us for the first time, you can read our past updates here. 

Last night, the country was placed into a third national lockdown until at least February half-term. It goes without saying that the next few months will be extremely tough for businesses up and down the country with tough restrictions on retail and hospitality.

Today, Rishi Sunak has unveiled £4bn worth of additional spending to mitigate the impact of lockdown on businesses. This is on top of the Job Retention Scheme (Furlough), Bounce Back loans and 100% business rates relief for retail, hospitality and leisure businesses.

In this update we will run through the new top-up grants announced today.

Top-up grants

Cash will be provided to businesses on a per-property basis (i.e. a business with five properties can receive five grants) with the level of grant funding available determined by your property’s rateable value. 

• Businesses with a rateable value of £15,000 or under will receive a grant worth £4,000.

• Businesses with a rateable value between £15,000 and £51,000 will receive a grant worth £6,000.

• Businesses with a rateable value of £51,000 and over will receive a grant worth £9,000.

The grants will be provided by local councils and as with the initial grants given during the first lockdown, they should contact you.

Discretionary Fund

Alongside the top up grants, businesses who are not eligible, such as those who sublet or are in co-working spaces, will be able to apply to a pot of £594 million in funding to local councils for discretionary support.

To have a chance at accessing this funding you should contact your council directly. 

For more information about all the schemes in place check out, you can read the full announcement on the Gov.UK website. Our friends at Coadec have also put together a helpful summary of all the support available.

As ever with the pandemic, policy is rapidly evolving. Experience suggests that further support may be announced in the coming weeks as the Government works with business groups. Our policy updates are designed to keep you in the loop as soon as policy shifts, so we will update you as and when more is announced.

Furlough Extended

As the UK enters a one month lockdown and businesses face potential restrictions over the course of Winter, it was inevitable that support would be expanded.

We already knew that the Job Retention Scheme (also known as furlough) was to be extended to December, but today the Chancellor went further. He announced a major extension to the Furlough scheme till March and substantially increased the generosity of the grant for the Self-Employed.

In this update, I’ll run through the key announcements that affect your business.

Furlough Extension

The Job Retentions Scheme will be extended to March. Eligible employees will receive 80% of their usual salary for hours not worked, up to a maximum of £2,500 per month. Employers will not have to contribute to that salary but will still have to make National Insurance and Employer pension contributions for hours not worked.

Employers will also be given flexibility on the scheme, with the option to furlough workers for just some of their hours.

There will be a review in January into the scheme, where employers may be asked to contribute as they did in August and September.

Additionally, employees that were employed and on the payroll on 23 September 2020 (the day before the Job Support Scheme announcement) who were made redundant or stopped working afterwards can be re-employed and claimed for.

However, the Job Retention Bonus will no longer be paid in February. But they will redeploy a retention incentive at a later date.

Self Employment Income Support Scheme

The Government is increasing the overall level of the grant to 80% of trading profits covering November to January for all parts of the UK. It was previously set at 55% of trading profits, or 80% in November and 40% in remaining months. The grant will open on November 30th two weeks earlier than announced and will be paid in time for Christmas.

For more information in both the schemes, you can read HM Treasury's Economic Support Factsheet.

We will keep you updated as more information comes out about these schemes through these Policy Updates and our Friday Newsletter.

Winter Economy Plan 2.0

“Today we go further” was the message of Chancellor Rishi Sunak in response to recent calls for extra help for regions entering local lockdowns. Currently, more than half of England’s population lives in areas in Tier 2 or higher. In his speech in Parliament Sunak addressed the ‘Tier 2’ dilemma. Until today, Tier 2 represented as Stephen Bush puts it “the worst of both worlds” where “businesses … face significant restrictions on how they operate, but [receive] no economic support.” New measures will ensure that some businesses will no longer be paradoxically better off under Tier 3.

The new measures announced today also included expanded funding for the self-employed, businesses forced to close due to local restrictions and the Job Support Scheme. This policy update will break down what the measures mean for entrepreneurs.

In this Policy Update, we explain the new policies set out in the Winter Economic Plan Statement, including the new Job Support Scheme.

Local Restrictions Support Grant

Hospitality businesses in areas at a high alert level (Tier 2) will now be able to benefit from Local Restrictions Support Grants. This measure is targeted at businesses who while not forced to close, experience falls in trading volume as a result of restrictions. Local authorities will administer the grants and will receive funding based on the number of hospitality, hotel, B&B, and leisure businesses in their area. There will also be additional funding for businesses that don’t fit neatly into a single category.

The grants will be up to £2,100 a month with the level of support varying based on the rateable value of the business’s premises, so:

• For properties with an RV of £15k or under, grants of £934 per month

• For properties with an RV of £15k or under, grants of £934 per month

• For properties with an RV of between £15k-£51k, grants of £1,400 per month

Eligibility criteria for the grants will be set by local authorities so if your business needs to access the scheme you should contact them directly. Businesses that have been living under Tier 2-equivalent restrictions for several months already will be able to backdate the grants to when the restrictions began.

By contrast if your business is legally forced to close as under very high alert (Tier 3) then you are able to claim £3,000 a month. This is an improvement from up to £1,500 per three weeks. They are also eligible to receive the payment sooner, after only two weeks of closure, rather than three.

Job Support Scheme

The Job Support Scheme has been expanded. When it was announced the scheme had employers paying a third of their employees’ wages for hours not worked, and required employers to be working 33% of their normal hours. The scheme now reduces the employee contribution to just 5% and reduces the minimum hours requirement to 20%.

Self Employment Income Support Scheme

The two forthcoming self-employed grants will be increased from 20% to 40% of profits, meaning the maximum grant will increase from £1,875 to £3,750.

We will keep you updated as more information comes out about these schemes through these Policy Updates and our Friday Newsletter.

Photo credit: Andrew Parsons/No 10 Downing Street

Policy Update: Winter Economy Plan

Welcome to our latest Policy Update. In these updates, The Entrepreneurs Network focuses on recent policy development and sets out (nearly) everything an entrepreneur needs to know about the topic. If you’re joining us for the first time, you can read our past updates here. 

As the Job Retention Scheme draws to a close and we face continued economic uncertainty due to the prospect of further social distancing measures, Rishi Sunak unveiled his ‘Winter Economic Plan’.

The Chancellor was keen to stress that while the furlough scheme was the right policy at the time, it is no longer. While his “primary goal is [still] to support people’s jobs”, he believes that continuing furlough will create a false sense of security by keeping people in jobs that won’t be viable in the long term. 

He also argued that the problem has shifted from businesses being prevented from operating due to lockdown to businesses trading under continued uncertainty and reduced demand.

In this Policy Update, we explain the new policies set out in the Winter Economic Plan Statement, including the new Job Support Scheme.

Job Support Scheme

The Job Retention Scheme will be replaced with a new Job Support Scheme. Inspired by the German Kurzarbeit short-time work scheme, it will support the wages of people working for businesses facing reduced demand. Workers participating in the scheme will need to work at least ⅓ of their current hours and be paid for that work as normal. Employees will then be paid 2/3rds of the wages they lost by reducing their hours, split evenly between employer and government.

For example, a worker previously working a 36 hour week could have their hours reduced to 12 hours a week, but be paid as if they had worked 28 hours. From the employers’ perspective, they will have only paid for 20 hours worth of work.

It will run from November to April and all SMEs will be eligible. However, larger businesses will only qualify if their turnover has fallen. Businesses can use the scheme even if they have not previously furloughed employees.

The level of grant will be calculated based on the employee's usual salary, capped at £697.92 per month.

Employers using the scheme will be able to access the Job Retention Bonus. If a previously furloughed worker is kept on through the scheme until the start of Feb 2021, over 60% of their average wage would have been covered by the government.

Support for the Self-Employed

The government is extending the Self Employment Income Support Scheme Grant (SEISS). In November, an initial taxable grant will be provided to those who are currently eligible for SEISS and are continuing to actively trade but face reduced demand due to coronavirus.  The grant will be worth 20% of average monthly profits, up to a total of £1,875.

There will be a second grant available to cover February till April, however the level this will be set at is yet to be determined.

Pay As You Grow

Businesses that have taken out Bounce Back Loans will be able to qualify for a new “Pay As You Grow” flexible repayment scheme. Borrowers will be able to extend the loan’s length from 6 to 10 years and can apply to pay only the interest on the loan for 6 months. There will also be the possibility of payment holidays.

CBILS 

Borrowers taking out loans through CBILS may also be able to extend the repayment period up to 10 years, provided their lender agrees to it. 

Applications for all of the government’s coronavirus business loan schemes will be extended to the end of November. 

Tax Deferrals

The 500,000 businesses who deferred their VAT bills till March 2021 will be able to repay them in eleven smaller interest-free instalments instead through the New Payments Scheme.

VAT Reductions

The temporary 15% VAT cut for the tourism and hospitality sectors will be extended to end of March next year.

Policy Update: Peer Networks and the Small Business Leadership Scheme

In multiple reports, we have emphasised the value of leadership training in promoting the adoption of business best practices. In our paper Management Matters we highlighted the close link between productivity and adoption of management best practices. While in Upgrade we noted that peer-to-peer learning was a key driver of digital adoption.  

Small Business Minister Paul Scully MP, who spoke at the launch of Upgrade, has announced two new training schemes designed to improve small businesses’ management, productivity and problem-solving skills. In this update, we explain the key features of the two new schemes.

Small Business Leadership Scheme

The Small Business Leadership Scheme is a 10-week virtual training programme delivered by university business schools. Business owners on the scheme will take part in 90-minute webinars run by business experts. They will also be required to to complete up to two hours of independent study and peer supported learning per week.

Places on the programme are fully funded by the Department for Business, Energy and Industrial Strategy and participation is free. However, places are limited. 

Any SME that has been trading for over a year with between 5 to 249 employees can take part, but any participant should be a decision maker or member of the senior management team within the business with at least one person reporting directly to them.

The curriculum will cover:

• Innovation and markets

• Leadership and employee engagement

• Vision, purpose and brand

• Demand creation and customer relationships

• Operational efficiency and financial management

• Action, planning, and implementation

If you’re interested in taking part you can enquire about places and find out which business schools are participating here.

Peer Networks 

Alongside the more traditional university-based training programme, the Government is also launching Peer Networks, a peer-to-peer networking programme for SMEs that is delivered locally by the network of Growth Hubs across England.

For businesses, it’s an opportunity to work through common business issues with a diverse group of SME managers.

Groups will have access to trained facilitators and will be able to flexibly select topics to cover based on the problems they have in common. Unsurprisingly, given social distancing measures, the scheme will be delivered virtually for the time being.

The programme is available to any SME business that has:

• Operated for at least one year

• At least five employees

• A turnover of at least £100,000

• An aspiration to improve

To apply and find out more, you can visit the Peer Networks website.

Policy Update: Apprenticeships

Welcome to our latest Policy Update. In these updates, The Entrepreneurs Network focuses on recent policy changes and sets out (nearly) everything an entrepreneur needs to know about the topic. If you’re joining us for the first time, you can read our past updates here. If you were forwarded this update, you can sign up here. 

Through the course of July, the Government has moved to put apprenticeships and vocational training at the heart of its plans for jobs. New incentives and rule relaxations have been introduced to encourage firms of every size to bring on apprentices and help those young people most likely to be hit by the COVID related downturn. This update sets out what those measures are, and how startups and entrepreneur-led firms can utilise them. 

Bonuses for hiring apprentices 

In his Summer Statement, Rishi Sunak announced a series of cash incentives for any firm that hires a new apprentice. The purpose was to create new opportunities for young people and help firms grow with skilled employees targeted at areas of business need. As the Chancellor put it in his statement, 'we know apprenticeships work'.  For six months from August 2020, the Government will pay bonuses to companies for hiring new apprentices at a rate of £2,000 for an apprentice under 25, and £1,500 for an apprentice over 25. Apprentices between 16-18 years old already benefit from a £1,000 bonus, so the total available support for these apprentices will be £3,000. Firms will also pay no employers' National Insurance contributions on apprentices under the age of 25. While apprenticeships can also be started by existing employees, these bonuses are only available to new hires. 

Greater access for SMEs 

Later in the month further relaxations were made to make it easier for small firms to use apprenticeships. Smaller firms, those who do not pay the Apprenticeship Levy because their annual payroll is below £3m, were previously capped at 3 apprentices, funded through the Digital Apprenticeship Service. That cap has now been increased to ten. This will allow SMEs to both recruit new staff and upskill existing employees through apprenticeships, with training paid for via the Levy. 

Dropping the 50% university ‘target’

To signal the direction of future policy, the Education Secretary Gavin Williamson gave a speech to formally ‘drop’ the target for 50% of school leavers to attend university. The speech prompted intense debate about whether there had ever been a meaningful target in the first place, but what mattered was the commitment to a Further Education White Paper, to give greater parity to technical, work-based routes, to be published later this year. To highlight the value that apprenticeships can give to society, Williamson pointed to the fact that ‘a work-based, technical apprenticeship, lasting around 2 years, gives greater returns than the typical three year bachelor’s degree’. With a White Paper and Spending Review expected in the Autumn, the spotlight on apprenticeships isn’t going away. 

Tim Smith is Director of Communications and Public Affairs at WhiteHat, a tech startup building an outstanding alternative to university through apprenticeships.

Policy Update: Summer Statement

In yesterday’s Summer Statement, the Chancellor announced a series of policies aimed at supporting jobs during the coronavirus pandemic and ensuing economic crisis. In this update we will explain some of these new initiatives and how they could help your business.

Job Retention Bonus

Potentially, the most significant measure in Rishi Sunak’s “Plan for Jobs” was the Job Retention Bonus. Currently the government plans to bring the furlough scheme to an end in October. As an incentive for businesses to rehire furloughed employees, the government has promised a one-off payment of £1000 for every furloughed employee who is rehired and kept until the end of January 2021, provided they are earning over £520 per month.

Kickstart Scheme

The Kickstart Scheme aims to help unemployed young people get jobs. The scheme will open for applications in August with the first jobs starting in autumn. Current plans expect the scheme to run till December 2021. They will fund six month work placements for 16-24 year olds on universal credit. Payments will cover 25 hours per week at minimum wage plus national insurance and pension contributions. There will be an extra £1000 per trainee employee that employers take on from this age bracket, £2000 for every new apprentice under 25 and £1500 for every new apprentice 25 and over.

Support for the hospitality sector

The hospitality and tourism industry have suffered more throughout the pandemic so special measures have been put in place to subsidise the sector and to encourage consumers to spend money in these parts of the economy. To this end, there will be a VAT cut from 20% to 5% on restaurants, cafes, pubs, accommodation and attractions like theme parks and cinemas.

In addition the “Eat Out to Help Out” scheme offers a 50% discount up to a value of £10 per head on food and drink in restaurants every Monday, Tuesday and Wednesday in August.

Infrastructure

Furthermore, there has been a large infrastructure package promised to stimulate jobs. £5.6bn has been promised for general infrastructure with a further £1.1bn allocated to make public buildings greener and £2m promised to make homes greener in the form of £5000 vouchers to fit homes with insulation (£10 000 for poorer households).

In his statement the Chancellor said it is unlikely that these will be the last of the coronavirus interventions so to stay abreast of the situation subscribe to our Policy Updates and Friday Newsletter to hear about new plans when they are announced.

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Policy Update: More Support for Start-Ups

Over the past couple of days, the government has announced two major policy changes to support innovative businesses affected by the COVID-19 crisis. In this Policy Update, we’ll explain the new measures and how they could affect your business.

First, due to popular demand the government will expand the Future Fund from £250m to £500m. The British Business Bank has already approved £320m of matched convertible loans to businesses across the UK. 

In welcome news, after lobbying from a range of innovative businesses and groups (including ourselves) businesses with headquarters outside the UK are now able to apply provided that at least half of their staff are based in the UK and that they make at least 50% of their revenues from UK sales. This ensures that startups who have participated in prestigious US accelerator programmes such as Y-Combinator are no longer barred.

If you want a refresher on the Future Fund, check out this previous policy update.

Second, the government has announced £191m in Innovate UK funding to help startups across the UK who need urgent financial support to keep their cutting-edge projects and ideas alive. The Sustainable Innovation Fund will also be open for startups working on sustainability-focused projects, such as “apps encouraging people to cut down their food waste” and more sustainable forms of packaging.

There are few conditions on the fund. First, your business needs to either have been affected by the impact of COVID-19 or working on a project related to the recovery. Second, if your project duplicates work that’s already being funded by other UK or EU programmes such as the rapid manufacturing of ventilators or vaccines it is not eligible. Third, you may be ineligible for funding under state aid rules if you’ve received more than €800,000 from other COVID-19 related schemes like the Coronavirus Business Interruption Loans Scheme (CBILS). Fourth, there must be at least one SME involved in the project. Finally, they won’t fund feasibility studies.

The first round of funding has up to £55m allocated towards it. You can apply for up to £175,000 in funding, but if you’re collaborating with another business or university then the project can receive up to £500,000. They’re looking for projects that will have a direct impact on the recovery so any project must last between 3 and 9 months.

You can apply for the scheme and find out more about the various rules and regulations on projects here.

Policy Update: Future Tech Trade Strategy

The Department for International Trade (DIT) has announced a series of policies with the goal of increasing tech trade with countries in the Asia Pacific. In this update, we explain how the new programmes could benefit your business – although a lot of the finer details have yet to be announced.

The Tech Exporting Academy will provide advice for companies to help them expand. This is a pro-bono service which will include information on regulation, compliance, legal, tax and intellectual property. It will be done in conjunction with professional services firms including Linklaters, Deloitte, KPMG, BDO,  Taylor Wessing, EY and Clifford Chance. The government has committed to ensuring that female tech entrepreneurs are represented when the first cohorts for the programme are selected.

A DIT Platform will help firms to attend international industry events and investor meetings. This virtual events platform will include virtual trade shows and ensure there will be online buyer/seller meetings and company/investor introductions. This will be launched in September.

A Digital Trade Network is being set up by DIT and DCMS. £8 million will be invested in a network to help businesses internationalise, focusing on Japan, South Korea, Thailand, Singapore, Indonesia and Australia. This will involve tech experts located in the embassies and high commissions. Tech Nation will join as a scale-up expert – both as part of their programmes on AI and cyber security and to extend their entrepreneur engagement programme to entrepreneurs in Singapore, Japan and Australia.

The Ready to Trade Campaign began as an advertising campaign launched in February 2020. It was focused on Sydney, Melbourne, Perth, São Paulo, Toronto, Shanghai, Hong Kong, Mumbai, Tokyo, Mexico City, Singapore, Johannesburg, Seoul, Istanbul, Dubai, New York, Chicago and Los Angeles. It will now include specific campaigns on EdTech, MedTech, cyber security, virtual reality, gaming and animation.

A Tech Network to enhance English regions’ ability to grow international trade partnerships will involve export champions across the Northern Powerhouse, Midlands Engine, London and the South. The network will work with the most promising regional scaleups in England while DIT and DCMS will work closely with Scotland, Wales and Northern Ireland too to facilitate similar opportunities.

The DIT’s High Potential Opportunities Programme will be expanded to include 5G, Industry 4.0, Photonics and Immersive Tech. Current High Potential Opportunities include agritech in the West Midlands and smart materials in Greater Manchester. The goal is for DIT to work with universities, Local Enterprise Partnerships (LEPs) and industry to drive investment into start-ups in regions.

UK Export Finance (UKEF) will increase its outreach and engagement. It will increase its marketing and communications to raise awareness of how they can help with the winning and the fulfillment of export contracts for tech firms. This increase in outreach is in addition to the extra measures UKEF already took for exporters during coronavirus. The first UKEF coronavirus package included export insurance for businesses exporting to The EU, Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland and the USA, increased budgets for other UKEF financing schemes and advice for UK businesses on exporting.

Free trade negotiations in Japan have begun. The Secretary of State announced her intention to sign an advanced digital and data chapter with Japan, looking at areas like the free flow of data, anti-data localisation and ways in which digital can be used to make trade simpler. She also said the UK is looking to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) digital and data agreements, making it easier to do business with the member countries; Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

We will keep you updated as more information comes out about these schemes through these Policy Updates and our Friday Newsletter.

Policy Update: Future Fund

If you have followed our Policy Updates or regular newsletter, you will know we have been pushing hard to find an equity-based solution for startups who can’t access the government’s Coronavirus Business Interruption Loans Scheme (CBILS). Last month, following the Save Our Startups campaign (of which, we were a founding member), the government announced the Future Fund, a matched convertible loan scheme for startups looking to raise between £250k and £10m. While welcomed by startups and investors, there was a fair bit of uncertainty over which businesses could qualify and whether the schemes would qualify for tax reliefs such as EIS and SEIS.

New guidance published by the British Business Bank resolves that uncertainty ahead of the scheme’s launch on Wednesday. In this update, we’ll run through the key aspects of the Future Fund programme.

The fund in brief

The government will match convertible loans of up to £5m. The loans will convert to equity at either the next fundraising event or when the loan matures (after three years). 

You can qualify provided you are a UK-incorporated startup with a significant economic presence in the UK (either half your sales or staff are in the UK) and you have raised at least £250k in equity finance in the last five years.

The scheme is investor-led. Your lead investor will apply for the matched funding using a portal on the British Business Bank website, which will go live on Wednesday.

Is the Future Fund EIS and SEIS compatible?

No. Investments made through the Future Fund will not qualify for EIS or SEIS tax relief. This is due to EU State Aid Rules. However, the government has confirmed that the compatibility of existing EIS investments will not be affected when the loan converts.

Can Advanced Subscription Agreements count towards the £250k raised?

Advanced Subscription Agreements, which allow investors to pre-pay for shares that will be allocated during a subsequent funding round at a discounted value, will not count towards the £250k raised unless they’ve converted to equity. 

Can I qualify for matched funding if my parent company is not incorporated in the UK?

No. This is the case even if the overwhelming majority of your economic activity is based in the UK. This will be an issue for companies that have taken part in US accelerator programmes – such as Y Combinator or Techstars – and have Delaware-incorporated parent companies.

Which investors qualify?

The British Business Bank state that “an investor must fall within any of the following categories:

• an “investment professional” within the meaning given to that term in article 19 of the FPO

• a high net worth company, unincorporated associated or high value trust falling within article 49(2) of the FPO

• a “certified sophisticated investor” or a “self-certified sophisticated investor” within the meaning given in articles 50 and 50A respectively of the FPO

• a “certified high net worth individual” within the meaning of article 48 of the FPO

• an equivalent professional, high-net worth, institutional or sophisticated investor in accordance with applicable law and regulation in such investor’s home jurisdiction

• an association of high net-worth or sophisticated investors within the meaning of article 51 of the FPO

• capable of being classified as a “professional client” within the meaning given in the glossary to the FCA Rules.”

It is useful to note that funds that have received government funding, for instance through the Enterprise Capital Fund will qualify.

The ability to self-certify will ensure most investors will qualify. The scheme is open to angel syndicates, micro VCs and crowdfunders. However, the lead investor must invest at least £12,500.

For more information on the Future Fund, there is a FAQ for businesses on the British Business Bank’s website. We also recommend signing up to Coadec’s newsletter and reading their update on the Future Fund.

Policy Update: MAC Call for Evidence

The Government will introduce a new immigration system on 1 January 2021. In preparation for this, it has asked the Migration Advisory Committee (MAC) to compile a new Shortage Occupation List, which will primarily focus on occupations at RQF Level 3-5 (medium skill). This is to be reported in September 2020.

Under the current Immigration system, UK employers don’t need to conduct the Resident Labour Market Test (RLMT) if they offer a role to a migrant that is on the Shortage Occupation List. (The RLMT requires employees demonstrate they can’t find a suitable UK settled worker.)

When the new immigration system is launched the RMLT will no longer apply whether or not the role is on the Shortage Occupation List. The Government has announced that they will abolish this test but some other advantages such as a lower minimum salary for the visa, as well as a lower minimum salary for indefinite leave to remain (permanent residency) will continue to apply.

The MAC has launched a call for evidence. If you employ, or plan to recruit, medium-skilled migrant workers the MAC wants to hear your views. The link to the consultation is here, and the deadline for responding is 24 June 2020.

Zenia Chopra is an Adviser to The Entrepreneurs Network and Head of Client Services at Kingsley Napley.

Policy Update: Job Retention Scheme Retained

Since it was announced in March, one million businesses have used the government’s Job Retention Scheme to furlough 7.5m workers.

In a rebuke to Ministers who warned that businesses were becoming addicted to furlough payments, Chancellor Rishi Sunak has announced that the government will extend the Job Retention Scheme until the end of October. Under the extension workers will continue to receive 80% of their wages (funded by the government) while they are furloughed. 

In the coming months, the government is planning on gradually re-opening the economy. As a result, the Job Retention Scheme will be modified to allow workers to return part-time.

From the start of August, furloughed workers will be able to return to work part-time. However, employers will be asked to pay a proportion of the salaries of furloughed staff.  Payments made by employers will be deducted from the government’s subsidy. Under this new arrangement, staff will continue to receive 80% of their salary, up to £2,500 a month.

Policy Update: COVID-19 Recovery Strategy

Today the Government has released its COVID-19 recovery strategy. The plan is to “return life to as close to normal as possible, for as many people as possible, as fast and fairly as possible... in a way that avoids a new epidemic, minimises lives losts and maximises health, economic and social outcomes.”

Over the coming months, the Government will introduce a range of adjustments to current social distancing controls, aiming to time these according to both the current spread of the virus and the Government’s ability to ensure safety. This will happen in steps.

The government has set out an indicative roadmap, but the precise timetable for these adjustments will depend on the infection risk at each point, and the effectiveness of the Government’s mitigation measures like contact tracing.

Restrictions may be adjusted by the devolved administrations at a different pace in Scotland, Wales and Northern Ireland because the level of infection – and therefore the risk – will differ. Similarly in England, the Government may adjust restrictions in some regions before others: a greater risk in Cornwall should not lead to disproportionate restrictions in Newcastle if the risk is lower.

The text below are the most broadly relevant parts of the 60-page plan. The Government is due to share further details this week.

Step One – 13 May (Page 25)

"The changes to policy in this step will apply from Wednesday 13 May in England. As the rate of infection may be different in different parts of the UK, this guidance should be considered alongside local public health and safety requirements for Scotland, Wales and Northern Ireland.

"For the foreseeable future, workers should continue to work from home rather than their normal physical workplace, wherever possible. This will help minimise the number of social contacts across the country and therefore keep transmissions as low as possible. All those who work are contributing taxes that help pay for the healthcare provision on which the UK relies. People who are able to work at home make it possible for people who have to attend workplaces in person to do so while minimising the risk of overcrowding on transport and in public places. 

"All workers who cannot work from home should travel to work if their workplace is open. Sectors of the economy that are allowed to be open should be open, for example this includes food production, construction, manufacturing, logistics, distribution and scientific research in laboratories. The only exceptions to this are those workplaces such as hospitality and nonessential retail which during this first step the Government is requiring to remain closed.

"As soon as practicable, workplaces should follow the new “COVID-19 Secure” guidelines"... "which will be published this week. These will ensure the risk of infection is as low as possible, while allowing as many people as possible to resume their livelihoods.”

Step Two – 1 June (Page 30)

"Opening non-essential retail when and where it is safe to do so, and subject to those retailers being able to follow the new COVID-19 Secure guidelines. The intention is for this to happen in phases from 1 June; the Government will issue further guidance shortly on the approach that will be taken to phasing, including which businesses will be covered in each phase and the timeframes involved. All other sectors that are currently closed, including hospitality and personal care, are not able to re-open at this point because the risk of transmission in these environments is higher. The opening of such sectors is likely to take place in phases during step three, as set out below."

Step Three – 4 July (Page 31)

"The next step will also take place when the assessment of risk warrants further adjustments to the remaining measures. The Government's current planning assumption is that this step will be no earlier than 4 July, subject to the five tests justifying some or all of the measures below, and further detailed scientific advice, provided closer to the time, on how far we can go. 

"The ambition at this step is to open at least some of the remaining businesses and premises that have been required to close, including personal care (such as hairdressers and beauty salons) hospitality (such as food service providers, pubs and accommodation), public places (such as places of worship) and leisure facilities (like cinemas). They should also meet the COVID-19 Secure guidelines. Some venues which are, by design, crowded and where it may prove difficult to enact distancing may still not be able to re-open safely at this point, or may be able to open safely only in part. Nevertheless the Government will wish to open as many businesses and public places as the data and information at the time allows. 

"In order to facilitate the fastest possible re-opening of these types of higher-risk businesses and public places, the Government will carefully phase and pilot re-openings to test their ability to adopt the new COVID-19 Secure guidelines. The Government will also monitor carefully the effects of reopening other similar establishments elsewhere in the world, as this happens. The Government will establish a series of taskforces to work closely with stakeholders in these sectors to develop ways in which they can make these businesses and public places COVID-19 Secure."

COVID-19 Secure Guidelines (Page 25)

“Many measures require the development of new safety guidelines that set out how each type of physical space can be adapted to operate safely. The Government has been consulting relevant sectors, industry bodies, local authorities, trades unions, the Health and Safety Executive and Public Health England on their development and will release them this week. 

"They will also include measures that were unlikely to be effective when the virus was so widespread that full stay-at-home measures were required, but that may now have some effect as the public increase the number of social contacts – including, for example, advising the use of face coverings in enclosed public areas such as on public transport and introducing stricter restrictions on international travellers. 

"Many businesses across the UK have already been highly innovative in developing new, durable ways of doing business, such as moving online or adapting to a delivery model. Many of these changes, like increased home working, have significant benefits, for example, reducing the carbon footprint associated with commuting. The Government will need to continue to ask all employers and operators of communal spaces to be innovative in developing novel approaches; UK Research and Innovation (UKRI) will welcome grant applications for proposals to develop new technologies and approaches that help the UK mitigate the impact of this virus.”

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Policy Update: Bounce Back Loans

Welcome to our latest Policy Update. In these updates, The Entrepreneurs Network focuses on recent policy development due to COVID-19 and sets out (nearly) everything an entrepreneur needs to know about the topic. If you’re joining us for the first time, you can read our past updates here. 

The Government has responded to concerns from SMEs who have faced difficulty in accessing the Coronavirus Business Interruption Loans Scheme (CBILS) by announcing new ‘Bounce Back Loans’. In this update, we’ll explain how the scheme could help your business.

Bounce Back Loans

As of next week (Monday 9am), small businesses will be able to apply online using ‘a short, simple form’ for Bounce Back Loans of up to £50,000 or 25% of turnover, whatever is lower.

Unlike CBILS, Bounce Back Loans will come with a 100% guarantee for lenders. As a result, loan applications that may have been rejected by banks under CBILS are likely to be accepted.

Businesses will not have to pay fees or interest during the first 12 months, and no repayments are due during this period. 

In order to ensure as many businesses can access the loan as possible, the government has announced there will be “no forward-looking tests of business viability; no complex eligibility criteria”. The aim is to ensure a faster process for approval. The Chancellor has stated that once a loan is approved, most firms should expect the funds to arrive within 24 hours.

For more information on the Government’s Bounce Back Loans, you can read HM Treasury’s summary of the scheme here.

Policy Update: New Support for Start-ups

In recent weeks, we have argued that there’s a gap in the government’s economic response to coronavirus. High-growth startups, which are typically loss-making (or even pre-revenue) have been shut out from the government’s Coronavirus Business Interruption Loan Scheme (CBILS), as the scheme requires banks to lend on normal commercial terms. In response, we joined up with other entrepreneurship groups to launch the Save Our Startups campaign and call for an equity-based solution for high-growth small businesses. Many of you reading this will have been among the thousands who signed the campaign.

We are pleased to announce that our calls have been listened to by HM Treasury, who have today announced a new £1.25bn package to support startups through the coronavirus crisis.

The support comes in two key forms. A new £500m public-private partnership convertible loan fund (close to what was advocated by the S.O.S campaign) and £750m (including £200m of fast-tracked funding) of grants and loans for research and development through Innovate UK.

The Future Fund 

The government’s Future Fund will issue convertible loans of between £125k and £5m to startups seeking bridge funding for working capital purposes. The funding must be matched by private investors and the government will provide no more than 50% of the funding. The loans will convert to equity at the next fundraising round at a 20% discount, or a higher rate if the private investor demands it.

For example, if you took out a £1m convertible loan from the Future Fund, then the government will take £1.25m worth of shares in your company at the next fundraising round where you raise more than £1m.

To qualify for matched funding, you must be an unlisted UK registered company that has raised at least £250,000 in aggregate from private third-party investors within the last five years. If your company is part of a corporate group, then only the parent company, if a UK registered company, is eligible to receive the loan. 

The government will also place controls on what you can use the additional funding for. It must not be used by your company to repay any borrowings, make any dividends or bonus payments to staff, management, or shareholders.

The scheme will launch in May and will remain open till September. You can find out the full details here.

Grants and loans for R&D

The government is also providing £750m in additional support for research and development through Innovate UK.

If you already receive funding from Innovate UK and are waiting on grant and loan payments, you will be able to opt-in to receive accelerated payments. We called for this in the Save Our Startups campaign and it will provide an additional £200m in liquidity to startups. 

An extra £550m will also be made available to increase support for existing Innovate UK customers and £175,000 of support will be offered to around 1,200 firms not currently in receipt of Innovate UK funding. However, the government is yet to publish the full details of this support. Once they do, we will let you know in a future policy update.

We will monitor both of these schemes to make sure they’re helping as many startups as possible. Keep a lookout in future updates for more information as to how the schemes are actually working on the ground.

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