Future Funds is a bridging loan scheme primarily aimed at pre-profit and pre-revenue high growth businesses, particularly those in the Tech Sector. The scheme is being administered by the British Business Bank (BBB). The headline terms include:


  • the business must be an unlisted company whose main business is in the UK;
  • the business must have raised at least £250k of equity in the past two years;
  • the business must be seeking a BBB bridging loan of between £125k & £5m which must be matched by co-investors;
  • if the business is part of a corporate group, only the ultimate parent company, if a UK registered company, is eligible to receive the loan;
  • the bridge funding shall be used solely for working capital purposes. 

Commercial Terms 

  • interest rate: 8% per annum;
  • term: 3 years;
  • unsecured;
  • a negative pledge, meaning BBB consent is required for the business to take on other debt finance;
  • BBB can sell off batches of the bridging finance loan without the borrower’s consent. 

Conversion and repayment

  • automatic conversion to equity on company’s next ‘qualifying funding round’ (which in broad terms is an where the amount raised through an equity issue at least equal to the aggregate of the bridging finance);
  • option for equity holders to convert the BBB loan on an ‘non-qualifying funding round’;
  • BBB to receive at least 20% discount on the equity subscription issue price if the loan converted to equity;
  • at the expiry of the term, if the loan has not converted to equity, twice the amount borrowed must be repaid.


For a scheme billed as being a significant business support measure for early stage businesses, the reality is that there is plenty of detail to take work through, in terms of eligibility, equity conversion and onerous terms.

  • Convertible loans are a sensible way for early stage business to quickly and easily raise finance, while giving the UK tax payer the possibility of sharing the upside value created by such business (unless the bridging loans are sold off). 
  • The scheme creates challenges for early stage businesses to convene meetings with investors to get them to come in alongside BBB’s fairly onerous loan terms, which could leave the existing investors and the founders disadvantaged – existing investors may prefer to provide further investment on existing terms, without adjusting their positions to accommodate BBB. 
  • The covenants contain a negative pledge, which could adversely impact future rounds of debt funding because BBB consent will be required. 
  • There is a potential downside for BBB – how many of the companies that make use of the scheme will succeed and how many will fail; how will BBB try to select future ‘winners’? 
  • As with other Government schemes, business are asking whether BBB will have the resources it needs to enable it to get funds to early stage businesses quickly enough – and at scale.

Well intentioned as it is, for many early stage businesses, the reality may be that the Future Funds scheme is an expensive finance scheme that is too complicated to use in the short timescales within which they need to secure additional working capital. It is likely to be quicker for early stage Tech businesses to receive additional capital from existing investors, most of whom will not wish to see their existing investments fail due to Covid-19. The Bounce Back Loan Scheme (BBLS) or the Covid-19 Business Interruption Loan Scheme (CBILS) may be a cheaper and more appropriate source of finance for many early stage businesses.

For further advice on your finance and banking support, please get in touch with:

For further support and advice relating to the impact of COVID-19, please view our COVID-19 Advisory Service page.

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