Innovation continuity loans: Strand 2 September 2020 follow-on competition

Key Features

Innovate UK can provide additional COVID-19 innovation continuity loans for the continuation of planned or existing innovation activity.

Programme:     Innovate UK

Award:     Up to £1.6 million per project

Opens: 2nd Sep 2020

Closes: 30th Sep 2020

! This scheme is now closed


Innovate UK is offering up to £210 million in loans to micro, small and medium-sized enterprises (SMEs) and third sector organisations that have a challenge in continuing, completing or following on an innovation project. Loans are for organisations that find themselves facing a sudden shortage or even unavailability of funds resulting directly from the COVID-19 pandemic.


Your proposed project must follow on from a recently completed project supported by an award from Innovate UK ending within the last 36 months. Innovate UK are looking for organisations who can demonstrate that their recently completed projects with Innovate UK have made the best progress in innovation and that their follow-on projects have the best potential for the future.

Your proposal must demonstrate:

  • a clear game-changing and/or disruptive innovative idea
  • a robust 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 and business will face, with realistic plans to manage, mitigate and minimise the impact of each of these
  • 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.

Your project must focus on commercialisation, growth or scale up. We will give priority to proposals likely to lead to growth and gains in productivity.

You must be able to show that you:

  • are facing a sudden shortage or even unavailability of funds resulting directly from the COVID-19 pandemic
  • can cover interest payments
  • will be able to repay the loan on time
  • need public funding

Projects can last up to 4 years, of which up to the first 2 years can focus on research and development (R&D), and up to 2 further years on establishing a clear route to commercial success. Innovate UK will require loan repayments over a further period of up to 5 years. However, the overall term of the loan must not exceed 7 years.


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

  • be a UK registered SME or third sector organisation
  • have successfully completed a project supported by an Innovate UK award in the last 36 months
  • carry out your project in the UK
  • intend to exploit the results from or in the UK
  • give evidence that your organisation is suitable to take on a loan

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

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


In this competition Innovate UK are not providing Innovation continuity loans to organisations:

  • that are continuing and completing a live project with an Innovate UK award
  • looking to carry out entirely new project activity

Innovate UK will decline loans for organisations which:

  • they consider unable to afford the interest and repayments on the loan
  • have not demonstrated that they are unable to obtain finance from other sources on suitable terms

Funding Costs

Innovate UK will offer loans of between £250,000 and £1.6 million. This is based on your project proposal and our judgement of the suitability and affordability of a loan for your organisation. The Innovate UK Loans Ltd credit committee will decide the final terms, amount and length of the loan offer.

Innovation continuity loans will be:

  1. Available for up to 2 years (the ‘availability period’) until the agreed end date of your project, provided that no drawdowns will be permitted after 31st March 2022. 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.

Application Process

There are 2 parts to applications:

  1. Quality of the project: this will be evaluated by our innovation teams based on the quality of your completed project with us, our satisfaction with the delivery of that project and our evaluation of the quality of your follow-on project proposal in this application. You must submit this proposal via the Innovation Funding Service portal here.
  2. Suitability of the organisation to receive a loan: this will be evaluated by our credit team based on your answers to the Early Metrics startup high growth index survey and your historic and forecast financial statements. You must also complete this survey, which is available here. Innovate UK may need further information to reach a final decision, at which point we may contact you. However, Innovate UK may also decide against offering a loan if the information you provide does not make an adequate case for your suitability for a loan.

You need to be successful in both parts of the application before Innovate UK will offer an innovation continuity loan. The Innovate UK Loans Ltd credit committee will decide the final terms of the loan offer.