Originally written by Timothy Adler on Small Business
The government is considering various rescue packages to help Britain’s tech sector start-ups excluded from business rescue schemes announced so far.
Although government has lauded the UK’s tech sector as the spearhead of Britain’s new economy – Boris Johnson wrote the foreword to Tech Nation trumpeting UK tech investment report last year – banks are refusing to offer state-guaranteed loans to loss-making start-ups.
Yet France has announced a €4bn (£3.5bn) start-up bailout fund – called a liquidity plan – to help French start-ups stricken by the coronavirus crisis.
One idea being considered is the government offering loans to start-ups, which could either be repaid by businesses after the crisis or turned into equity stakes in tech start-ups owned by the state. Venture capital would have to match whatever the government invests, according to the Financial Times, to prove commercial viability and also keep within EU state aid rules, which ban direct state intervention.
See also: Why government needs to boost EIS tax relief to 80% to save our start-ups
It would be similar to 3i, then called the Industrial and Commercial Finance Corporation, the government scheme launched after the Second World War to help regenerate the economy.
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