While the Government has introduced a wide range measures to support businesses, including deferred VAT payments, grants and new loan schemes (CBILS & CLBILS), there have been calls to do more to specifically help startups.
In an open letter to the Government, the Save Our Startups campaign has warned that Britain could “lose a generation of startups and high growth businesses” to coronavirus if no Government help is forthcoming.
The campaign warns that many of the UK’s startups and high-growth businesses do not qualify for the Coronavirus Business Interruption Loan Scheme which is designed to mainly assist SMEs. In addition, usual sources of funding, such as venture capital, are less accessible at this time.
It appears the pressure has worked, as the government has announced a new £1.25bn package to support innovative start-ups that are not eligible for existing coronavirus rescue schemes.
The package includes a new £500 million loan scheme for high-growth firms, called the Future Fund, and £750 million of targeted support for small and medium sized businesses focusing on research and development.
This new initiative highlights the government’s commitment to ensuring that the economic impact of COVID-19 does not quash some of the UK's most innovative companies. In addition, Chancellor Rishi Sunak is looking to start-ups to help power the UK's growth after the coronavirus crisis.
However, to qualify to receive the government money, a company must have raised at least £250,000 privately in the last five years.
Not only this, but any money put in by the government must be matched by private investors. In addition, if the money is not repaid, the government will take an ownership stake in the company.
While the package has been welcomed on the whole by entrepreneurs, however some are worried that it is overly complex and this will slow down its implementation. As speed is really of the essence during this time, that could prove problematic.
