Updated on November 10, 2020

The Future Fund will support the UK’s innovative businesses currently affected by Covid-19 and unable to access other Government business support programmes. It will provide UK-based early stage companies with convertible loans between £125,000 and £5 million.

The UK Government promised £1bn worth of support for struggling startups via the fund, as announced on April 20.

In total, the Government said that it was committing £250m towards the new £500m fund that would invest in high-growth private companies that needed money, with the other half of the £500m to be supplied by the private sector, with the startup investment dovetailing alongside private sector investment.

Deadline update: The Chancellor extended the government’s three Coronavirus Business Interruption Loan Schemes and the Future Fund once more on November 2, The extension aligns all the end dates of the schemes to January 31, 2021, ensuring that there is further support in place for those who may need it.


  • Investor-led process

The application process is investor-led. This means an investor, or lead investor of a group of investors, applies in connection with an eligible company.

  • Match Funding

The Future Fund will match 100% of the amount provided by investor(s), up to a maximum of £5 million.

  • Loan Size

The Future Fund loan amount provided to the company ranges from £125,000 to £5 million. Amounts of Future Fund loans must be at least matched by co-investment from investors.

  • Use of Proceeds

Funding must not be used to (a)repay any borrowings; (b) pay any dividends; (c) pay any bonuses; (d) pay any advisory fees.

  • Interest Rate

The loans will have a minimum of 8% per annum (non-compounding) interest charge applied which will be higher if the company and the investor(s) agree between themselves. Unlike a typical bank loan, the interest is not payable on a monthly basis and instead will accrue until the loan converts when it will either be repaid or convert in equity.

  • Term

The loan will mature after 36 months and cannot be repaid early by the company other than with the agreement of all of the investors.

Updates to eligibility criteria

Recent changes to the scheme’s eligibility criteria means that UK companies who have participated in highly selective accelerator programs and were required, as part of that program, to have parent companies outside of the UK will now be able to apply for investment.

The companies must still meet the Future Fund eligibility criteria, which includes having:

  • Raised at least £250,000 in third-party funding in the last five years
  • A substantial economic presence in the UK

Only companies that can attract at least 50% of the total amount in eligible matched funding will receive investment from the scheme.

The company must be a UK-incorporated limited company or be eligible to apply as a non-UK parent company and have been incorporated on or before December 31, 2019.

The Government-backed investment in startups will come in the form of convertible loans. It is designed to provide liquidity in difficult times and promote private investment as if the loans are not repaid, they will convert into equity in the company.

If you would like to know more about the recent changes and how your business can benefit from Future Fund Scheme, please contact us today. Our business growth experts are here to help you guide through these challenging times.