Set to launch over the coming weeks, Future Fund will offer convertible loans to UK-based startups from £125,000 to £5 million. The government describes the programme as a “suitable option for businesses that rely on equity investment and are unable to access the Coronavirus Business Interruption Loan Scheme."

Currently, the government is finalising the scheme, and it’s likely there will be great demand when it launches in May. So now is the time to ensure you’re prepared. We’ve put together a definitive guide that explores who is eligible, how to apply and everything else you need to know about the scheme.

First, you need to check if your company actually qualifies for the scheme. The government has published three criteria. Your business must be located in the UK, able to secure match funding and raised at least £250,000 of equity investment over the past five years. 

Since the fund was announced, there’s been plenty published about what it promises but nearly nothing on its mechanics. There are a number of steps you must take to ensure your application is successful and inevitably receive a government loan.

1. Check that your business is eligible.

2. Find investors.

3. You’ll then need to get investor consent, a shareholder resolution and a board resolution to apply for the scheme. 

4. Download the Future Fund Convertible Note from the gov.uk site, which will be available in May.

5. Ensure you fill out all the requested details, such as names of all investors and their investments.

6. Conduct Know Your Investor and Anti Money Laundering Checks on your investors.

7. Get all investors to sign the Convertible Note, and email this to Future Fund.

8. A Future Fund inspector will then go through this paperwork to see if your company qualities and if everything is legitimate  - they’ll most likely go through your Companies House filings. 

9. If you’re cleared, you’ll get an email from the government along with a government-signed agreement.

10. Your investors can then send funds to your company bank account.

11. Once you’ve received this money, you’ll need to send a copy of your bank statements to the government.

12. If you pass this stage, the government will then wire funds.

Again, the scheme will face a lot of demand from startups across the country in the coming weeks. So, now that you know how the process works, you should begin looking for investors and secure their support.. 

• If you're primarily raising from existing investors, let them know that you intend on applying for the Future Fund, explain that you would need a match investment and see if they can top up their previous investment. 

• If you’re primarily raising from new funds and VCs, this can take months as a result of due diligence. Before Future Fund opens, begin sorting out all this paperwork so they have a document bundle ready. Our platform offers a free Due Diligence checklist.

• If you intend on primarily raising from angel investors, it’s important to realise that Future Fund is not compatible with SEIS or EIS (SeedLegals is lobbying to change this). While difficult, you’ll need to convince angels to invest without these. 

Other things to know

When it comes to raising money from investors, you need to conduct a Know Your Customer / Anti-Money Laundering check. That’s pretty simple: just get your investor to send a photocopy of their passport and keep it on file. 

As aforementioned, your business should have raised at least £250,000 to qualify for the scheme. The government will likely go through your Companies House filings to ensure this is the case, so your filings must be up-to-date. Shareholder approval, a board meeting to approve the transaction and support from 50% of the investors by the number of shares held are also crucial. 

Completing these steps isn’t exactly rocket science, but getting all the necessary paperwork together can take weeks. If you wait too long, you’ll end up at the back of the queue. So you should start preparing now. 

When it comes to conducting the different checks and getting approvals, you can do all of these things on the SeedLegals platform. Sign up here.