A leading accountant has welcomed the new Future Fund but believes that restrictions could lead to limited take up from businesses.
The government announced the new scheme to support early stage and start-up businesses which have been adversely impacted by Covid-19 – and are unable to secure finance under the existing Coronavirus Business Interruption Loan Scheme (CBILS).
It will provide between £125,000 and £5 million to qualifying early stage businesses, with the government initially making £250 million available through the Future Fund.
The fund is being administered by the British Business Bank and will launch in May, remaining open for applications until September.
Requirements set out to access the fund include that businesses must have raised at least £250,000 from private third-party investors in the last five years.
Sean Farnell is a partner at accountancy firm Burgis & Bullock, which has offices in Leamington Spa, Nuneaton, Rugby and Stratford-upon-Avon.
He said: “We understand the finance provided by the Future Fund can only be used for working capital purposes and not to repay existing borrowings or pay dividends to shareholders or bonuses to employees.
“The new scheme is a welcome addition to the range of government financial support for companies affected by Covid-19.
“The future strength of the economy will be heavily dependent on the survival of the UK’s fast-growing and innovative young companies.
“But the loans will be provided on a matched funding basis, meaning that at least the same amount of finance must be raised from other sources, such as existing or new investors or lenders.
“The requirement to have raised at least £250,000 in previous funding and to secure matched funding from other investors could prove a significant barrier.
“During the current pandemic, this requirement is likely to restrict the take-up of the fund.”