£226m of Future Fund loans gone to firms that went bust
£226m-worth of loans issued by the British Business Bank’s Future Fund have been given to companies that have become insolvent, new data has revealed.
The Future Fund was launched on 20 May 2020 to support innovative and fast-growing businesses during the pandemic. The state development bank issued convertible loans to successful applicants, subject to equal match funding from private investors.
The Future Fund issued 1,190 companies with convertible loans worth £1.14bn in total, meaning that around a fifth of the value of those loans have been given to firms that subsequently went bust.
59 insolvencies were recorded among Future Fund borrowers in the last quarter, up from 29 in the previous quarter.
The latest data comes as the scheme passes the end of the initial three-year maturity period for all of the convertible loans issued, meaning that the majority of the portfolio has converted to an equity interest.
The Future Fund took an equity stake in 10 additional companies in the second calendar quarter of this year, compared to 31 conversions in the previous quarter.
Read more: Half of Future Fund recipients say scheme saved business
The British Business Bank said that the slowing level of corporate activity is in part due to the majority of outstanding Future Fund loan recipients having decided on their three-year maturity option.
As at 30 June 2024, 149 loans had been granted an extension of up to two years.
“The Future Fund was created at the height of the pandemic to ensure a flow of capital to companies that would otherwise have been unable to access government support schemes, while ensuring long-term value for the UK taxpayer,” said Ken Cooper, managing director, venture solutions at the British Business Bank.
Read more: Who has been utilising the future fund?
“As we have now passed the end of the initial three-year maturity period for all of the Convertible Loans issued, the majority of the portfolio has converted to an equity interest and we are naturally seeing the rate of conversions decrease. Of the remaining companies with loans, the majority have taken the decision to extend them for a further two years.”
