HM Treasury Announces £1 Billion Support Package for Innovative Firms
On Monday, it was announced by Rishi Sunak that the UK Government would be issuing a new £1.25 billion support package to help those businesses driving innovation and development. It has been well documented in recent weeks that many small businesses are struggling to access the Coronavirus Business Interruption Loan Scheme, so this further support package, exclusively for innovative firms, is a step in the right direction. IW Capital will always hope to see support for innovative entrepreneurs.
Chancellor Sunak said the package would be tailored and targeted to ensure the most dynamic of firms and sectors receive the help needed to protect them through the COVID-19 crisis. The package is made up of two branches: a £500 million loan scheme for high-growth firms, called the Future Fund; and a £750 million package of targeted support for small and medium sized businesses focusing on research and development.
Although this announcement is promising, the Government and UK banks must deliver this package in an efficient and generous manner to avoid similar criticisms as faced by the Coronavirus Business Interruption Loan Scheme (CBILS).
For tech firms in particular, the CBILS was – and indeed, still is – hard to access. The scheme has more of a focus on profits than potential, meaning that many businesses which will likely be hugely successful in future are refused help due to a loss on the balance sheet. This new fund announced by Sunak will hopefully rectify some of these issues.
The importance of private investors, still, cannot be underestimated. This new fund will take time to become established and accessible, and until then the use of other tax-efficient Government schemes – such as the Enterprise Investment Scheme – will be crucial to safeguard small firms in the UK.
The EIS is one of the UK Government’s most successful initiatives in terms of driving investment into high-growth early-stage companies. It has helped produce some incredible business successes that otherwise may not have got off the ground due to the reluctance of banks to lend to these firms. While confidence in investing has undoubtedly reduced, there are still some fantastic opportunities to invest and support the growth of British firms that are expanding and hiring – especially in the MedTech and Pharma arenas.
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