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Home > News > Coronavirus Future Fund – applications now open

Coronavirus Future Fund – applications now open

20 May 2020 | Paul Hardman

On 20 April 2020 the UK Government announced a new convertible loan scheme called the Future Fund. Since our last article here, further details of the Future Fund scheme have been published and applications for the Future Fund scheme are open as of today (20 May 2020).

Key Features of the Future Fund

Key Features of the Future Fund Scheme are as follows:

Total Future Fund amount: the UK Government has initially made £250 million available under the Future Fund. It is predicted to be very popular and on 18 May 2020 the Chancellor of the Exchequer, Richi Sunak stated that if there was sufficient demand the UK Government would be ‘more than happy to expand the scheme’.

Nature of loan: loans must be in the form of unsecured, convertible loans.

Matched funding: the amount loaned by the UK Government must be at least matched through co-investment by one or more eligible investors (“matched investor(s)”).

Loan size: the loan amount ranges from £125,000 to £5 million.

Loan term: the loan will mature after 36 months.

Repayment: the loan is repayable in certain circumstances (including maturity at 36 months, on sale of the borrowing company or on an IPO) with a 100% redemption premium on the principal loan amount. The loan cannot be repaid early without agreement of the UK Government and the matched investor(s).

Conversion: the loan will convert into shares in the borrowing company on a ‘conversion event’ which includes an exit or a new funding round.

Use of loan proceeds: Loan proceeds must not be used to:

  • repay any borrowings from a shareholder or shareholder related party (other than repayment pursuant to bank or venture debt facilities);
  • pay any dividends or other distributions;
  • for a period of 12 months from the date of the convertible loan agreement, pay any bonuses or other discretionary payments; or
  • pay any advisory or placement fees or bonuses.

Loan interest rate: loans will have a minimum of 8% interest per annum (non-compounding). The interest rate will be higher if agreed between the borrowing company and the matching investor(s). Instead of being paid monthly, interest accrues until the loan converts. At this point the interest is either repaid or converts into equity in the borrowing company.

Standardised terms: matching investor(s) and the UK Government both invest using a non-negotiable, convertible loan agreement.

Applying for the Future Fund 

Applications are made online through the British Business Bank’s website and are investor-led. This means an investor, or lead investor of a group of investors, applies in connection with an eligible borrowing company.

Applications will generally be processed on a ‘first come, first-served’ basis and will not be screened, organised or prioritised based on the requested loan amount, location of the applicant company’s business or diversity of the applicant company’s management scheme. However, the UK Government through the British Business Bank is collecting diversity data for monitoring and reporting purposes and is encouraging all match funding investors to sign up to HM Treasury’s Investing in Women Code.

There will be some limits on how applications from investors with multiple investee companies will be processed: if a lead investor submits several applications in one day and there are a high number of other applications on that day (which is highly likely) then only one application submitted by such a lead investor may processed on that day.

Final guidance states applications are expected to take a minimum of 21 days from initial application to funding being available. However, the average length of time in practice may differ.

Eligibility for the Future Fund


Investors must fall within one or more specific categories to be eligible. This effectively means that friends and family will be ineligible to provide match funding under the Future Fund scheme. However, there is no jurisdictional limit on where investors are based.

Your company

To be eligible to apply for the Future Fund scheme your company must:

  • have raised at least £250,000 in equity from third-party investors in previous funding rounds in the last five years (from 01 April 2015 to 19 April 2020, inclusive);
  • be the ultimate parent company if a member of a corporate group;
  • not have any of its shares or other securities listed on a regulated market, a multilateral trading facility, a recognised investment exchange and/or any other similar market, stock exchange or listing venue;
  • must be a UK incorporated limited company;
  • must have been incorporated on or before 31 December 2019; and
  • must have a ‘substantive economic presence in the UK’, which means at least one of the following must be true for your company:
    • half or more employees are UK based; and/or
    • half or more revenues are from UK sales

No EIS/SEIS relief

Convertible loans under the Future Fund scheme do not meet current Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) qualification requirements. Final guidance on the Future Fund confirms that existing EIS investments in a borrowing company will not be affected where the convertible loan converts into shares. However, the guidance does not give this assurance in respect of future EIS or SEIS investments.

Specialist legal advice

If your company is eligible and you want to apply for the Future Fund scheme, the first step is to consult with a solicitor to consider in detail how unsecured, convertible loans will affect your existing capitalisation table. In addition, a solicitor will be required to draft the necessary legal documentation and distribute funds awarded to your company if its application is successful.

Our team of specialist Corporate and Commercial solicitors in Bristol and London are ready to help you. If you want assistance with the Future Fund scheme, please contact:

Paul Hardman – 0117 906 9425 – 

Bridget Juckes – 0117 906 9260 –

Karen Davies – 0117 906 9238 –


This guidance is correct as of 20 May 2020.

Please note that in relation to the UK Government’s response to the ongoing coronavirus pandemic our advice is based on the UK Government’s announcements about changes it intends to make to the law. The situation regarding the pandemic and the UK Government’s response to it is changing fast and in consequence the content of any new or changed law may differ from that anticipated.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.

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