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Future Fund scheme could prove costly for SMEs


This week, the Government announced a £250m package to support Britain’s SMEs during the nation’s COVID-19 crisis.

The aid known as the Future Fund scheme aims to provide loans of between £125,000 and £5m to businesses, with the loans needed to be match-funded by external investors.

The Fund, set to launch in May in partnership with British Business Bank is only available to unlisted businesses that have a substantial economic presence in the UK, and have previously raised external funding of up to £250,000 in the last five years.

The funding comes in conjunction with a series of other government-backed loans, such as the Coronavirus Business Interruption Loan Scheme (CBILS), which is available to firms with an annual turnover of up to £45m.

Recently, the CBILS has been facing criticism due to its slow process of approving businesses for loans. As of last week, just over £1bn had been lent to around 6,000 firms ” a low figure considering nearly 30,000 business owners have applied for financial relief.

Considering the slow implementation of the CBILS, there are fears the Future-Fund may not deliver either; speaking to Real Business, Jack Clipsham Partner and Head of Corporate Finance at Kreston Reeves, comments on some of the scheme’s flaws;

“The 8% interest rate is quite high it is pale in comparison to the rates associated with the trigger mechanism, a conversion into equity with a 20% discount or repayment with a 100% premium. Whilst this may be a good deal for the Government, businesses and investors may disagree.

“we would recommend that businesses looking for cash to see them through these unprecedented times look first at the various other schemes the Government has introduced before exploring the Future Fund.

“If other options are not open to businesses, then the Future Fund might prove expensive but a viable option, particularly if loans are repaid in full before any trigger points”

For more on information on future funding schemes, visit



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