Eligibility

You can apply for a loan of between £100,000 and £2 million to fund your project’s eligible costs.

Projects can last up to 5 years, including both the R&D and commercialisation phases. Projects are expected to start by 31 July 2023.

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.

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.

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

Subcontractors are allowed in this competition.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.

Innovae 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 (including the availability and extension periods) will last and how long the repayment period you are requesting, will be.

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, 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

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

For more information on company sizes, please refer to the company accounts guidance. This is a change from the EU definition unless you are applying under State aid.

If you are applying for an award funded under State aid Regulations, the definitions are set out in the European Commission Recommendation of 6 May 2003.