Innovation loans: April 2018 open competition

Key Features

Loans for game-changing innovations with strong commercial potential that will significantly improve the UK economy.

Programme:     Innovate UK

Award:     up to £10m

Opens: 9th Apr 2018

Closes: 13th Jun 2018

! This scheme is now closed

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.

Projects should aim to develop new products, processes or services (or innovative use of existing ones) believed to be significantly ahead of anything similar in the field.

Your project should focus on late stage research and development (R&D) activities classified as experimental development. Innovate UK expect you to be able to show a clear route to commercial success for your project.

Innovation loans will be:

  1. Available for up to 3 years (the ‘availability period’) when the project is under way, but the exploitation has not yet started. You can borrow in stages (‘drawdowns’) during this period and will pay interest on anything you borrow.
  2. Extended for up to 2 years (the ‘extension period’) when the project is focused on developing the commercialisation of the product. 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.
  3. Repayable over a maximum of 5 years (the ‘repayment period’) after the availability and extension periods. You will have to repay on a regular quarterly schedule and you will pay interest on the outstanding amount of the loan.

Your application should propose how long your project will last (including the availability and extension periods) and how long the repayment period should 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 particularly welcome proposals from innovation-based businesses with significant ambition and potential for growth or scale up.

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.

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

Your proposal must:

  • demonstrate a clear, considerable potential to make a significant and positive impact on the UK economy and/or productivity
  • demonstrate realistic, significant potential for global markets

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

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

Loans of between £100,000 and £1 million are available. Projects should last up to 5 years and are expected to start by December 2018.

Businesses must be able to show that they:

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

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

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