Whilst I’ve fulfilled the role of ‘Nominated Solicitor’ on numerous Future Fund applications, the incompatibility of the Future Fund scheme with EIS led a lot of my clients based in Scotland to decide the fund wasn’t for them. This shows in the official data released by the British Business Bank – only 3% of funding deployed by the Future Fund has gone to companies in the devolved nations (Scotland, Wales and Northern Ireland).
On Friday, the Scottish Government announced a £38m package of support to meet the needs of high growth companies. These measures are:
The Fund will be managed by the Scottish Investment Bank. Like the Future Fund, the investment will be in the form of a non-negotiable convertible loan, the headline terms of which can be found here. Any funding approved may be in combination with a grant which may form up to 20% of the award from the Fund. Unlike the Future Fund, in order for a company to be eligible, it must be able to demonstrate that COVID-19 has had a clear impact on revenue, working capital costs or access to equity investment resulting in a cash shortfall, a diversion of resources away from growth activities or a delay in achievement of development or investor milestones.
The grant element will not require to be repaid by the company and the convertible loan element can either be repaid with associated interest or converted into equity.
A full list of eligibility criteria can be found here. It is a competitive scheme so meeting the criteria is not a guarantee of an award. Given what I’ve read so far, it does seem like there will be some form of diligence on each company applying so ensuring a quality application will be key.
If you are keen to apply, applications will be open from 20 July 2020 until 5pm on 31 July 2020. This is a very short window so be quick!
The terms have only just been released so look out for my next blog setting out my thoughts on the content of the convertible loan agreement.
If you have been following my blogs, you’ll know I’ve been immersed in all things Future Fund related. As of 7 July 2020, there has been £379.9m worth of convertible loans approved for 376 companies since the fund opened for applications on 20 May 2020. This sum has been matched by at least the same amount from third-party investors.