How will the government's Future Fund help fintechs?
Chancellor of the Exchequer, Rishi Sunak has announced a COVID-19 aid package for UK startups
The 'Future Fund', announced by Sunak on 20 April, will provide government loans to UK-based companies ranging from £125,000 to £5mn.
The loans, which will be subject to at least equal match from private investors, are aimed at businesses relying on equity investment and which are unable to apply to the previously announced Coronavirus Business Interruption Loan Scheme (CBILS).
The government is initially pledging £250mn, which will be available from May this year. However, it added that this amount will be kept under review.
The scheme will be delivered in partnership with the British Business Bank.
Funding is only to be used for working capital purposes, the government said, adding that it will automatically convert into equity at the company's next qualifying funding round.
This would be at a minimum discount of 20% to the price set by that funding round.
Innovation will be crucial
Separately, the government has also announced £750mn in support for "the most R&D intensive small and medium sized firms".
The funding will prove particularly useful to the UK's fintech industry, which plays host to many innovative SMEs.
Upon the announcement, Innovate Finance CEO, Charlotte Crosswell said: "Financial innovation will play a vital role as we emerge from the crisis, especially in areas of financial inclusion, SME financing and digital transformation of the financial services sector."
Crosswell added that the new measures will help businesses, including fintechs, find the funding they need to survive the coronavirus pandemic.
She explained: "The UK is already known globally as a leader in fintech and we want to ensure companies have support and funding in place to continue their development at this crucial time."
Find out more about the funding here.
For more information on all topics for FinTech, please take a look at the latest edition of FinTech magazine.