To receive an innovation loan for a new project you must:

• be a UK registered micro, small or medium-sized enterprise (SME)
• carry out your project from or in the UK
• intend to exploit the results from or in the UK
• give evidence that your business is suitable to take on a loan

Innovate UK will evaluate whether your business is suitable to receive an offer of a loan for your project.

Individuals, large companies, not for profits, charities, academic institutions, and research organisations are not eligible for innovation loans.

More information on the different types of organisation can be found in our Funding rules.

Only single businesses can receive loans, so collaboration with other organisations cannot be funded in this competition.

You must only include eligible project costs in your application.

You are responsible for entering your own project costs in the application.

Under current restrictions, this competition will not fund any procurement, commercial, business development or supply chain activity with any Russian or Belarusian entity as lead, partner or subcontractor. This includes any goods or services originating from a Russian or Belarusian source.

Subcontractors

Subcontractors are allowed in this competition.

Subcontractors can be from anywhere in the UK and you must select them through your usual procurement process.

You can use subcontractors from overseas but must make the case in your application as to why you could not use suppliers from the UK.

You must provide a detailed rationale, evidence of the potential UK contractors you approached and the reasons why they were unable to work with you. Innovate UK will not accept a cheaper cost as a sufficient reason to use an overseas subcontractor.

All subcontractor costs must be justified and appropriate to the total project costs.

Number of applications

Your business can only submit one application per round of this competition. If you submit more than one application, only the first application will be considered for assessment.

Use of animals in research and innovation

Innovate UK expects and supports the provision and safeguarding of welfare standards for animals used in research and innovation, according to best practice and up to date guidance.

Applicants must ensure that all of the proposed work within projects, both that in the UK and internationally, will comply with the UKRI guidance on the use of animals in research and innovation.

Any projects selected for funding which involve animals will be asked to provide additional information on welfare and ethical considerations, as well as compliance with any relevant legislation as part of the project start-up process. This information will be reviewed before an award is made.

You can use a previously submitted application to apply for this competition.

Exclusions

In this competition we are not providing grant funding.

Innovate UK will not provide funds to match the grant funding of any projects.

Innovate UK will not fund commercial activities such as marketing and sales.

Innovate UK cannot fund projects that are:

• dependent on export performance, for example giving a subsidy to a baker on the condition that it exports a certain quantity of bread to another country
• dependent on domestic inputs usage, for example giving a subsidy to a baker on the condition that it uses 50% UK flour in their product

Funding Costs

Up to £25 million has been allocated to fund innovation projects across the current rounds of this competition.

Innovate UK will offer loans of between £100,000 and £2 million, based on your project proposal and our judgement of the suitability and affordability of a loan for your business. The Innovate UK Loans Ltd credit committee will decide the final terms, amount and length of the loan offer.

Innovation loans will be:

1. Available for up to 3 years when the project is under way, but the exploitation has not yet started (the ‘availability period’). You can borrow in stages (‘drawdowns’) during this period and will pay interest at 3.7% per annum on anything you borrow, with additional interest at 3.7% accrued and deferred until the repayment period.
2. Extended until the first commercial sales from the results of the project, up to a maximum of 2 further years (the ‘extension period’) after the end of the availability period. You will not be able to make further drawdowns during this period. You will not have to make repayments, but you will pay interest on the amount you have borrowed at 3.7% per annum, with additional interest at 3.7% accrued and deferred until the repayment period.
3. Repayable over a maximum of 5 years (the ‘repayment period’) after the availability and extension periods. You will have to repay anything you have borrowed, including interest accrued and deferred from the availability and extension periods, on a quarterly schedule. You will pay interest at 7.4% per annum on the outstanding loan amount.

These are the longest periods we will consider. The overall term of the loan must not exceed 7 years. Your application must propose how long your project will last, including the availability and extension periods, and how long the repayment period you are requesting, will be.

These periods must be based on the needs of your business. Innovate UK will consider the suitability of your proposed timings in any loan offer that we make to you.

Innovate UK expect to take security in the form of a debenture. Innovate UK will not require personal guarantees.

More details of our approach, including a summary ‘heads of terms’ document setting out the main terms and conditions of the loan, is in the terms and conditions for this competition.

You can 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.

The gross grant equivalent will be the present value of the difference between the market cost of interest and fees of a similar loan, using reference rates for interest, and the cost of an innovation loan. The present value is determined at the date of commitment of the loan.

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

Innovate UK expect that most innovation loans will meet this requirement.