The package includes a £500 million investment fund for high-growth companies impacted by the crisis, made up of funding from government and the private sector. SMEs focusing on research and development will also benefit from £750 million of grants and loans

Chancellor of the Exchequer Rishi Sunak said the targeted and tailored help would ensure firms in some of the most dynamic sectors of the UK economy - ranging from fintech to life sciences - are protected through the crisis.

“Britain is a global leader when it comes to innovation. Our start-ups and businesses driving research and development are one of our great economic strengths, and will help power our growth out of the coronavirus crisis," he says. “This new, world-leading fund will mean they can access the capital they need at this difficult time, ensuring dynamic, fast-growing firms across all sectors will be able to continue to create new ideas and spread prosperity.”

Delivered in partnership with the British Business Bank and launching in May, the fund will provide UK-based companies with between £125,000 and £5m from the government, with private investors at least matching the government commitment. These loans will convert to equity if not repaid.

To be eligible, a business must be an unlisted UK registered company that has previously raised at least £250,000 in equity investment from third party investors in the last five years.

The programme was dawn up with advice from Silicon Valley Bank. Erin Platts, head of Emea and president of the UK branch of SVB comments: "UK start-ups and scale-ups are creating technologies and jobs that are critical to the development of life changing breakthroughs and enhancements in the areas of healthcare, finance, communication, education, work and beyond. We believe these actions are a welcome step in the right direction.”

The initiative follows weeks of lobbying by startups, who employ approximately three million people and generate a total turnover of £1.3trn of the £1.9trn of the entire UK SME economy, with an average turnover per employee of £380,000.

Irene Graham, CEO of the ScaleUp Institute, welcomes the move: “A suite of solutions - from venture debt to grants to innovation loans - is necessary and so we are pleased to see that this combination of solutions has been brought together today."

Others in the sector are calling on the Treasury to introduce a 100% Government-backed loan scheme, and to recognise the competencies of digital challenger banks.

Writing in a blog on Finextra, Nick Ogden CEO and founder of ClearBank, says: "This scheme does not address the short term cash flow issues that many businesses will face next week, in just four day's time.

"Following the 2007/6 global financial crisis, the UK government has encouraged the establishment of a competitive financial services marketplace. These new entrants are digitally savvy and are capable of operating in a highly efficient manner. Many hold the same permissions as the historic banks, with Central Bank capabilities at the Bank of England and I hope that HM Treasury embraces this digital distribution opportunity, now.

"We face a growing economic tsunami, which will arrive shortly, and actions to help flatten that wave are need today."

As with other aspects of the pandemic response, the UK Government has been behind the curve compared to its European compatriots in propping up startups. The French Government introduced a. EUR4 billion startup fund in March, and earlier this month Germany pledged EUR2 billion to help its local startups through the crisis.