Innovation loans: infrastructure systems

The aim of this competition is to offer a loan to help SMEs overcome barriers to scaling up innovation in infrastructure systems. It will enable businesses to demonstrate first commercial deployment at scale and take their innovations to market by proving that:

• the innovation delivers the expected outcomes
• there is a clear market opportunity for their business
• applicants are ready to scale up their business and their innovation

Projects must show significant late stage innovation and clearly show how they are working with end users and problem owners. Projects should be in one of our priority areas, which are:

• smart infrastructure
• urban living
• energy supply and systems
• connected transport

Projects should last up to 5 years, of which up to 3 years can focus on research and development (R&D), and up to a further 2 years are available to establish a clear route to commercial success. Loan repayments will be required over a further period of up to 5 years.

Businesses must be able to show that they:

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

Proposals needs to be for a first commercial deployment at a scale sufficient to demonstrate that the solution delivers the real world outcome it was designed for. Therefore your proposal must:

• be commercial, involving real customers or end users
• have low technical risks. The aim should not be to develop technical capabilities but to demonstrate whether the solution delivers the expected outcome
• have a large potential. It will, if proven, be replicated many times, creating significant business growth

There are 4 specific themes for this innovation loan competition:

1. Smart infrastructure
2. Urban living
3. Energy supply and systems
4. Connected transport

For more information on the themes, click here.

Eligibility

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

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

Individuals, 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.

Loans of between £100K and £1m. This is based on the project proposal and Innovate UK’s judgement of the suitability and affordability of a loan for your business.

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.

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

Project Types

Your project should focus on later stage R&D activities classified as experimental development. We expect you to be able to show a clear route to commercial success for your project.

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 small business
• up to 35% if you are a medium-sized business