The peer-to-peer lending sector has heralded the effective delivery of the government’s future fund.
The fund, which launched at the end of May, offers convertible loans ranging from £125,000 to £5m from the government, subject to at least equal match funding from private investors.
It is aimed at innovative and high-growth businesses, which must have previously raised at least £250,000 in equity investment from third-party investors in the past five years.
The scheme was due to close for applications on 30 September, but last week Chancellor Rishi Sunak extended it until the end of the year.
Several P2P lenders have accessed, or are attempting to participate in, the scheme, including Assetz Capital, JustUs and Propio, which is set to launch a P2P platform this Autumn.
Tom Buttress, co-founder and chief executive of Propio, which raised £278,000 in total from its funding round and the government’s future fund to prepare for its pivot into P2P, praised the scheme’s purpose and delivery.
Read more: P2P lenders give CBILS mixed reviews
“I think it has been a successful and necessary initiative,” he said.
“The government created a workable solution within weeks which we found to be a pretty straightforward process with very clear requirements.”
“And the principle behind the fund is good too.
“We, like many early stage businesses, were relying on private venture capital to grow and with Covid-19 the confidence was completely wiped out from many areas within the venture capital market, so this was a really neat way to enable innovative firms like ours to get the funds we needed to progress and move forward.”
Some industry onlookers have praised the future fund for aiding companies that did not qualify for the coronavirus business interruption loan scheme (CBILS).
JustUs is hoping to raise £1.2m from the fund after the platform’s losses meant it did not meet the criteria for CBILS.
“There are probably no fintechs that received CBILS loans because they have raised equity and have losses and that’s why the future fund was designed, to support those fast growth businesses that are equity funded,” Lee Birkett, founder of JustUs, previously told Peer2Peer Finance News.
Stuart Law, chief executive of Assetz Capital, which is aiming to raise over £1m from the fund in order to scale and grow, praised the government for increasing the amount of money in the scheme.
“The future fund has far exceeded expectations,” he said.
“The original sum indicated by Sunak and the Treasury has been far exceeded and there was never any doubt they wouldn’t allow demand to exceed the original sum so that’s certainly very good.”
However, David Bradley-Ward, chief executive of Ablrate, was disappointed the fund is not eligible for the Enterprise Investment Scheme (EIS) and said some tax relief was needed to open the scheme up to other investors besides venture capital.
“The scheme is better than nothing, I know it’s worked for some people and that’s great,” he said.
“But an 80 per cent write-off of tax money into businesses would have been a huge boost.”
Data from the Treasury has revealed that the future fund has provided £588.3m through 590 convertible loans up to 2o September.