Innovation loans: July 2018 open competition

Overview

Innovate UK is to offer up to £10 million in loans to micro, small and medium-sized enterprises (SMEs). Loans are for highly innovative late stage projects with the best game changing and/or disruptive ideas or concepts. There should be a clear route to commercialisation and economic impact.

Proposals can come from any technology (including arts, design, media or creative industries) and any part of the economy.

Scope

To be in scope, your proposal must demonstrate:

• a clear game-changing and/or disruptive innovative idea
• that your idea can lead to innovative products, processes or services that are significantly ahead of others in the field or that it includes prototyping, demonstrating, piloting, testing and validation in environments that represent real life operating conditions
• a strong and deliverable business plan that addresses (and documents) market potential and needs
• a team, business arrangement or working structure with the necessary skills and experience to run and complete the project successfully and on time
• awareness of all the main risks the project will face, with realistic management, mitigation and impact minimisation plans for each
• sound, practical financial plans and timelines that represent good value for money
• a clear, evidence based plan to deliver significant economic impact, return on investment (ROI) and growth through commercialisation, as soon as possible after project completion

Projects should last up to 5 years, of which up to 3 years can focus on late stage research and development (R&D), and up to 2 more years on establishing a clear route to commercial success. Loan repayments will be required over a further period of up to 5 years.

Businesses must be able to show that they:

• can cover interest payments
• will be able to repay the loan on time
• need public funding

Eligibility

To take on an innovation loan for a project you must:

• be a UK based SME
• carry out your project in the UK

Individuals, research organisations and large companies are not eligible for innovation loans. Only single businesses can receive loans, so collaboration with other organisations cannot be funded in this competition.

Funding Costs

Loans of between £100,000 and £1 million will be offered.

You could get a loan of up to 100% of your eligible project costs. Since the loan will have favourable terms (particularly a below-market rate of interest) the value of this benefit over the life of the loan will be the equivalent of a grant and will be a form of state aid. For experimental development projects this grant equivalent, as a proportion of the eligible project costs, can be:

• up to 45% if you are a micro or small business
• up to 35% if you are a medium-sized business

Interest will be charged at the rate of 3.7% per year on outstanding amounts, payable quarterly in arrears.

Exclusions

Innovate UK will not fund proposals that:

• do not fit the classification of experimental development and require significant early stage R&D
• do not meet the competition scope, loan amount or duration
• do not address the size, potential for, and access to the market for the innovation
• cannot present evidence that their idea or concept has the potential to lead to significant return on investment (ROI), positive economic impact, growth and scale-up of the business

Innovation loans will not be offered to:

• businesses they consider unable to afford the interest and repayments on the loan or that may be in financial difficulty
• businesses that have not demonstrated that they are unable to obtain finance from other sources on suitable terms