Innovation loans: April 2021 open competition

Key Features

Businesses can apply for loans for innovative projects with strong commercial potential to significantly improve the UK economy.

Programme:     Innovate UK

Award:     Share of up to £20 million

Opens: 26th Apr 2021

Closes: 2nd Jun 2021

! This scheme is now closed


Innovate UK is offering up to £20 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 disruptive ideas or concepts. There should be a clear route to commercialisation and economic impact.


The aim of this competition is to help businesses overcome barriers to their innovations becoming a successful, commercial reality. The loans are intended to support significant, sustainable business growth which results in considerable economic impact.

Innovate UK are looking for businesses who can demonstrate their projects have the best potential to deliver future growth.

Your idea must lead to innovative products, processes or services that are significantly ahead of others in the field.

Your proposal must demonstrate:

  • a clear game-changing and 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 can include:

  • prototyping
  • demonstrating
  • piloting
  • testing
  • validation

in environments that represent real life operating conditions.

Innovate UK are looking to fund a portfolio of projects and businesses, across a variety of technologies and markets.

Projects can last up to 4years, of which up to 2 years can focus on late-stage research and development (R&D). Up to 2 more years can be spent 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.

Your application will be evaluated on Innovate UK’s:

  • assessment of the quality of your project proposal
  • judgement on the suitability of your business to receive an offer of a loan

Innovate UK will decline loans for businesses which:

  • we 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

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

Specific Themes

Your proposal must demonstrate:

  • an appropriate and evidenced loan request
  • a clear route to commercial success with potential to make a significant and positive impact on the UK economy and productivity
  • realistic, significant potential for global markets
  • a strong management team
  • why you are unable to fund the project from your own resources or other forms of public or private-sector funding


Loans of between £250,000 and £1.6 million are available to fund your project’s eligible costs.

Projects can last up to 4 years, including both the R&D and commercialisation phases. Projects are expected to start by September 2021.

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

  • be a UK registered SME
  • intend to exploit the results from or in the UK
  • give evidence that your business is suitable to take on a loan

Individuals, academic institutions, 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.

Subcontractors are allowed in this competition and must be selected through a participant’s normal procurement process.

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

Funding Costs

Innovate UK have allocated up to £20 million in this competition as an extension to the innovation loans pilot programme.

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 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 2 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 Innovate UK will consider and, since the overall term of the loan must not exceed 7 years, your application should propose how long your project (which includes the availability and extension periods) will last and how long the repayment period should be.

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. The gross grant equivalent will be the present value, at the date of commitment of the loan, 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. 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


In this competition Innovate UK are not providing grant funding.

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

Innovate UK are not funding projects that are:

  • dependent on export performance
  • dependent on domestic inputs usage