Coronavirus: Boris Johnson’s government urged to bail out UK startups

  • Boris Johnson’s government to bail out thousands of UK start-ups businesses which risk collapse due to the coronavirus lockdown.
  • The Liberal Democrats urged the government to focus on using existing schemes to provide financial help to young businesses.
  • It came after the Federation of Small Business warned that the government’s coronavirus bailout scheme was “simply not working well enough.”
  • The Treasury will reportedly announce a sweeping rescue package for new firms as early as Monday amid concerns that measures which have been introduced so far do not go far enough to support early-stage businesses.
  • Visit Business Insider’s homepage for more stories.

Opposition parties and industry leaders have urged Boris Johnson’s government to bail out thousands of UK start-ups businesses as they battle to stay afloat during the coronavirus lockdown.

The Treasury will reportedly announce a sweeping rescue package for new firms as early as Monday amid concerns that measures which have been introduced to date do not go far enough to support early-stage businesses.

The Liberal Democrats, which has 11 seats in the UK parliament, urged the government to focus on using existing schemes to provide financial help to young businesses.

Their three-point plan urged the government to fast-track tax credit payments that businesses receive in return for carrying out research and development.

It said the government should use the Enterprise Investment Scheme, which helps early-stage companies to raise cash, to pay them up to £3 million this year, up from the current £1 million limit.

The proposals also suggested the government introduce an emergency grant scheme to provide up to £100 million for green start-ups.

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The government’s package next week will reportedly focus on a “co-investment strategy,” whereby investors continue to back promising companies but the government matches their funding, according to a Telegraph report.

It came after the Federation of Small Business warned that the government’s coronavirus bailout scheme was “simply not working well enough.”

“The question of support for early-stage, loss-making start-ups remains a pressing one,” the FSB’s chairman Mike Cherry said last week.

“The list of businesses that spent their early years in the red only to go on and be great successes is as long as your arm. They must not be abandoned.”

The government’s Coronavirus Business Interruption Scheme allows most businesses to apply for loans that are guaranteed by the government, but banks have told start-ups that they need to have been profitable for at least three years to be eligible.

It means that growing businesses that have not yet turned a profit risk collapse, even if they are now profitable. Many are not able to secure credit because they do not have consistent revenue streams and are only able to stay solvent if they can secure loans.

A cross-party group of MPs last week wrote to Chancellor Rishi Sunak voicing concerns that there were not enough provisions for fast-growing British companies.

In a letter, the MPs including Labour MP Meg Hillier and Bim Afolami, a Conservative, suggested the government boost start-ups with cash through the state-backed British Business Bank, the Telegraph reported.

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