UK registered businesses can apply for loans for innovative projects with strong commercial potential to significantly improve the UK economy.
Innovate UK is offering up to £25 million in loans to micro, small and medium sized enterprises (SMEs). Loans are for highly innovative late stage research and development (R&D) projects with the best potential for the future. There should be a clear route to commercialisation and economic impact.
Your project must lead to innovative new products, processes or services that are significantly ahead of others currently available, or propose an innovative use of existing products, processes or services. It can also involve a new or innovative business model.
Your project must focus on one or more of the future economy areas included in the Innovate UK plan for action.
You must be able to show that you:
- need public funding
- can cover interest payments
- will be able to repay the loan on time
The funding available will be allocated across a series of competitions with the next round opening on the day the previous round closes:
- round 9 opens 11 May 2023 (this competition)
- round 10 opens 13 July 2023
- round 11 opens 14 September 2023
- round 12 opens 9 November 2023 and will close on 10th January 2024
In applying to this competition, you are entering into a competitive process.
This competition closes at 11am UK time on the deadline stated.
Funding type - Loan
Loans can be between £100,000 and £2 million.
Who can apply
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 December 2023. Your exact project start date and first innovation loan drawdown will depend on the timing of the final credit committee decision and completion of loan documentation.
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
We 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.
More information on the different types of organisation can be found in our Funding rules.
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.
Subcontractors can be from anywhere in the UK and you must select them through your usual procurement process.
You can use subcontractors from overseas but must make the case in your application as to why you could not use suppliers from the UK.
You must provide a detailed rationale, evidence of the potential UK contractors you approached and the reasons why they were unable to work with you. We will not accept a cheaper cost as a sufficient reason to use an overseas subcontractor.
All subcontractor costs must be justified and appropriate to the total project costs.
Number of applications
Your business can only submit one application per round of this competition. If you submit more than one application, only the first application will be considered for assessment.
You can use a previously submitted application to apply for this competition.
We will not award you funding if you have:
- failed to exploit a previously funded project
- an overdue independent accountant’s report
- failed to comply with grant terms and conditions
Subsidy control (and State aid where applicable)
This competition provides funding in line with the Subsidy Control Act 2022. Further information about the Subsidy requirements can be found within the Subsidy Control Act 2022 (legislation.gov.uk)
Innovate UK is unable to award organisations that are considered to be in financial difficulty. We will conduct financial viability and eligibility tests to confirm this is not the case following the application stage.
EU State aid rules now only apply in limited circumstances. Please see our general guidance to check if these rules apply to your organisation.
If you are unsure about your obligations under the Subsidy Control Act 2022 or the State aid rules, you should take independent legal advice. We are unable to advise on individual eligibility or legal obligations.
You must always make sure that the funding awarded to you is compliant with all current Subsidy Control legislation applicable in the United Kingdom.
This aims to regulate any advantage granted by a public sector body which threatens to, or actually distorts competition in the United Kingdom or any other country or countries.
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:
- 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.
- 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.
- 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.
These periods should be based on the needs of your business. We will consider the suitability of your proposed timings in any loan offer that we make to you.
We expect to take security in the form of a debenture. We will not require personal guarantees.
More details of our approach, including a summary ‘heads of terms’ document setting out the main terms and conditions of the loan, is in the terms and conditions for this competition.
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
We expect that most innovation loans will meet this requirement.
For more information on company sizes, please refer to the company accounts guidance.
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.
This competition offers loans to help businesses overcome barriers to their innovations becoming a successful, commercial reality. The aim is to make a considerable economic impact which results in significant, sustainable business growth.
Innovate UK is looking for businesses who can demonstrate that their projects have the best potential for the future.
Your idea must lead to innovative new products, processes or services that are significantly ahead of others currently available or propose an innovative use of existing products, processes or services. It can also involve a new or innovative business model.
Your proposal must demonstrate:
- a clearly expressed and compelling innovative idea
- a robust and deliverable business plan that addresses and shows evidence of market potential and needs
- a team with the necessary skills and experience to run and complete the project successfully and on time, and take the outputs forward
- 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 and ability to repay the loan
- why you are unable to fund the project from your own resources or other forms of public or private sector funding
- 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:
These can be in environments that represent real life operating conditions.
We are also particularly interested in receiving applications from diverse businesses; those involving communities that are typically under-represented, including from regions outside the ‘Golden Triangle’ (London, Oxford and Cambridge) or with for example, female, ethnic minority and diverse ability founders.
Your application will be evaluated on:
- the quality of your project proposal
- the suitability of your business to take on a loan
We will decline applications for 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
We want to fund a variety of projects across different technologies and markets, with a particular focus on future economy areas set out in the Innovate UK plan for action. We call this a portfolio approach.
Your project must focus on one or more of the following themes or sub-themes:
- impact of industrial processes and use of materials
- agriculture and food and other sources of emissions
- capital intensity
Health and Wellbeing
- tackling ill health
- enhancing wellbeing
- diet and food
Next generation digital technologies
- advanced materials and manufacturing
- artificial intelligence digital and advanced computing
- bioinformatics and genomics
- engineering biology
- electronics, photonics and quantum technologies
- energy and environment technologies
- robotics and smart machines
We will only fund experimental development projects, as defined in the guidance on categories of research.
Projects we will not fund
In this competition we are not providing grant funding.
We will not provide funds to match the grant funding of any projects.
We will not fund commercial activities such as marketing and sales.
We 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
11 May 2023 - Financial Submission guidance and guide to a Good Project Application: access the resources website
11 May 2023 - Competition opens
17 May 2023 - Online briefing event: watch the recording
24 May 2023 - Deep dive financial workshop 1: register to attend
5 June 2023 - Deep dive financial workshop 2: register to attend
14 June 2023 - Deep dive financial workshop 3: register to attend
12 July 2023 11:00am - Competition closes
25 August 2023 - Applicants notified
18 October 2023 - Final lending decisions notified
31 December 2023 - Expected project start date
Before you start
You must read the guidance on applying for a competition on the Innovation Funding Service before you start.
An application for an innovation loans competition needs different information from one for a grant application. Even if you have applied for funding from Innovate UK before, you are strongly advised to read the innovation loans guidance before you start.
We will run an online applicant briefing webinar on Wednesday 17 May 2023. This webinar will provide essential information on innovation loans, including the scope of the programme, the application process (both the project and financial aspects), the assessment process and the approach to our credit decision making process. This webinar will also be recorded.
We also encourage you to view our previously recorded webinars on creating a strong project application, and on the requirements for the business and financial submissions, which are available on the Innovate UK KTN website.
Applicants in this round will also have the opportunity to join an online financial submission ‘deep dive’ workshop, covering some of the most important financial aspects of suitability for a loan including:
- presenting credible forecasts for future revenues and costs
- demonstrating effective management of liquidity and working capital
- showing adequate capitalisation
Dates and a link to registration for these workshops and the webinars are in the 'dates' section. Places in these workshops will be limited, to allow group discussion with our team.
We will not accept late submissions. Your application is confidential.
Entering into a loan agreement with us is a financial commitment. You need to confirm to us that the loan is for business purposes.
You are wholly responsible for ensuring that it is the right approach to financing your business. You must make sure that your business is legally allowed to borrow and you will be able to fulfil the repayment obligations under the loan. You should take expert advice before submitting an application.
By submitting an application, you are providing authority for Innovate UK (and any subsidiary or agency appointed to assess your application) to do checks on the financial standing of your business.
This might include, but will not be limited to, checks with credit reference agencies (which might be recorded on your record) to determine your credit standing, identity, beneficial ownership and control, and source of existing funds.
The principles that Innovate UK follows when we collect, hold or use your personal information and how you can check what details we hold are set out in Innovate UK’s personal information charter.
In the application process (and as part of the loan agreement) we will require you, or the person appointed by your company to act for it, to enter into a legally binding declaration. You should take independent advice on the content of this declaration.
Before submitting, it is your responsibility to make sure:
- that all the information provided in the application is correct
- your proposal meets the eligibility and scope criteria
- all sections of the application are marked as complete
You can reopen your application once submitted, up until the competition deadline. You must resubmit the application before the competition deadline.
What we ask you
The application is split into 3 sections:
1. Business and financial details.
This includes a link to questions that you must answer about your business. You must complete the spreadsheet template to provide financial information about your business for the full period of your loan request.
2. Project questions.
3. Project finances.
We will make our decision based on:
Quality of the project
This will be assessed by independent experts based on your answers to the project questions in this application and the finances you enter when describing your project.
Suitability of your business to receive a loan
This will be evaluated by Innovate UK’s credit team based on your answers to the business and financial details questions, along with your historic and forecast financial statements. We will include the results of the Early Metrics start-up high growth index as part of this evaluation.
Your application will be considered based on the assessment of the quality of your project and an initial review of the suitability of your business to receive a loan. You will be notified if your application progresses to full credit analysis of your business.
If your application progresses, we may contact you for further information to reach our final decision. We may decide against offering a loan if the information you provide does not make an adequate case for your suitability.
You must complete and submit all parts of the application.
You need to be successful in all parts of the application before we will offer an innovation loan. The Innovate UK Loans Ltd credit committee will decide the final terms of the loan offer.
Accessibility and inclusion
We welcome and encourage applications from people of all backgrounds and are committed to making our application process accessible to everyone. This includes providing support, in the form of reasonable adjustments, for people who have a disability or a long-term condition and face barriers applying to us. Read more on how we are making our application process more accessible and inclusive for everyone.
You must contact us as early as possible in the application process. We recommend contacting us at least 15 working days before the competition closing date to ensure we can provide you with the most suitable support possible.
You can contact us by emailing firstname.lastname@example.org or calling 0300 321 4357. Our phone lines are open from 9am to 5pm, Monday to Friday (excluding bank holidays).
1. Project details
This section provides background for your application and is not scored.
Business and financial information
This section is not scored by our assessors. The business and financial information will be used by us to consider the suitability of your business for a loan.
You must answer questions about your:
- innovation loan request
- management and ownership
- corporate governance and employees
- product or service development
- funding strategy
- growth challenges
You must provide financial information to us about your business. This is done through completion of the spreadsheet template that you must download and fill in offline. At the end of the business and financial information questions, you must upload the completed financial spreadsheet.
Overview and project summary
Briefly describe your business and its current position in the marketplace. Describe your vision for growth and how you plan to achieve this. Describe your project briefly and be clear about what makes it innovative.
Your answer can be up to 400 words long.
Decide which people from your organisation will work with you on the project and invite those people to help complete the application.
You must complete this section. Give your project’s title, start date and duration. Your project duration will be the availability and extension periods
Select the type of research you will undertake.
Equality diversity and inclusion survey
All participants must complete an equality diversity and inclusion survey to submit your application. The survey will ask you questions on your gender, age, ethnicity, disability status and details about your business. You will always have the option to ‘prefer not to say’ if you do not feel comfortable sharing any information.
We collect and report on equality, diversity and inclusion (EDI) data to address under-representation in business innovation and ensure equality, diversity and inclusion across all our activities.
Describe your project in detail and in a way that you are happy to see published. Do not include any commercially sensitive information. If we award your project funding, we will publish this description. This could happen before you start your project.
Your answer can be up to 400 words long.
Describe how your project fits the scope of the competition. You must show how your project fits with one or more of the future economy themes.
- Net Zero
- Health and Wellbeing
- Next Generation Digital Technologies
- Technology Families
The themes are described in detail in the Innovate UK plan for action.
If your project is not in scope it will not be sent for assessment. We will tell you the reason why.
Your answer can be up to 400 words long.
2. Application questions
The assessors will score all your answers apart from question 1. You will receive feedback for each scored question. Find out more about how our assessors assess.
You must answer all questions. Your answer to each question can be up to 800 words long. Do not include any website addresses (URLs) in your answers.
Question 1. Applicant location (not scored)
You must state the name and full registered address of your organisation and any subcontractors working on your project.
We are collecting this information to understand the geographical location of all applicants.
Question 2. Project proposal
What is the business need, technological challenge or market opportunity behind your innovation? What approach will you take and where will the focus of the innovation be?
Describe or explain:
- the main motivation for the project
- the business need, technological challenge or market opportunity and how your project will respond to this
- how this project fits with your current product, service lines or offerings
- the wider economic, social, environmental, cultural or political challenges which are influential in creating the opportunity
- the nearest current state of the art, including those near market or in development, and its limitations, how you will improve on this and your freedom to operate
- the nature of the outputs you expect from the project and how these will help you to target the need, challenge or opportunity identified
- the current level of readiness, how it is likely to change over the life of the project and how it is likely to lead to project success
- how the project will make you more competitive and lead to commercial success
- the impact national and global factors have had on businesses or sectors that are a focus of your project
You must submit one appendix. It can include diagrams and charts to help support your answer. It must be a PDF, up to 2 A4 pages long and no larger than 10MB in size. The font must be legible at 100% zoom.
Question 3. Market opportunity
What does the market you are targeting look like and how are you going to grow your business as a result of the project?
Describe or explain:
- the markets (domestic, international or both) you will be targeting in the project and their size, structure and dynamics
- the target markets’ main supply or value chains and business models, and any barriers to entry that exist
- your current position in the markets and supply or value chains outlined, and whether you will be extending or establishing your market position
- your target customers or end users, and the value to them, for example, why they would use or buy your product
- your route to market
- how you are going to profit from the innovation, including increased revenues or cost reduction
Question 4. Project delivery
Who is in the project team, what are their roles and how will you manage the project effectively?
Describe or explain:
- the roles, skills and experience of all members of the project team that are relevant to the approach you will be taking, including any roles you will need to recruit for
- the resources, equipment and facilities needed for the project and how you will access them
- the details of any vital external parties, including subcontractors, who you will need to work with to successfully carry out the project
- the resources available to take the project to market after the development period, including commercial resources
- the main work packages of the project, indicating the total cost of each one
- your approach to project management, identifying any major tools and mechanisms you will use to get a successful and innovative project outcome
- the management reporting lines
- your project plan in enough detail to identify any links or dependencies between work packages or milestones
You must submit two appendices to support your response to this question.
You must submit an appendix containing a short summary of the main people working on the project to support your answer. It must be a PDF up to 4 A4 pages long and no larger than 10MB in size. The font must be legible at 100% zoom.
You must submit a project plan or Gantt chart as an appendix to support your answer. It must be a PDF, up to 2 A4 pages long and no larger than 10MB in size. The font must be legible at 100% zoom.
Question 5. Project risks
What are the main risks for this project?
Describe or explain:
- the main risks and uncertainties of the project, including the technical, commercial, managerial and environmental risks
- any project inputs that are critical to completion, such as resources, expertise, data sets
- any output likely to be subject to regulatory requirements, certification, ethical issues and so on, and how you will manage this
- what methods of future proofing you have considered against risks arising from possible national and global factors
- any project inputs that are critical to completion, such as resources, expertise, data sets
You must submit a risk register as an appendix to support your answer. It must be a PDF, up to 2 A4 pages long and no larger than 10MB in size. The font must be legible at 100% zoom.
Question 6. Project costs and value for money
How much will the project cost and how does it represent value for money for your business and the taxpayer?
Describe or explain:
- the total eligible project costs and the loan you are requesting in relation to the goals of the project and your business
- how this project represents value for money for you and the taxpayer
- how it compares to what you would spend your money on otherwise
- any subcontractor costs and why they are critical to the project
- why you need this public sector support
- what advantages this public sector funding would offer your project, for example, appeal to investors, reduced risk or a faster route to market (this list is not exhaustive)
- if any, what other support you have been offered or have received for this project
- what other routes of investment you have already approached and why a loan would be a better fit for your business
You must complete your project costs, organisation details and funding details in the application.
For full details on what costs you can claim see our project costs guidance.
Background and further information
Innovation loans will be made through Innovate UK Loans Ltd, a wholly owned subsidiary of UK Research and Innovation (UKRI).
The innovation loans scheme aims to provide finance that is affordable, patient and flexible for late stage innovation projects that have a clear route to commercial success.
They are aimed at innovative SMEs who will be able to manage a loan, but who struggle to access finance or who need to raise funds alongside offers from commercial lenders or schemes backed by the British Business Bank.
This competition is operated by Innovate UK.
Innovate UK complies with the requirements of GDPR, and is committed to upholding the data protection principles, and protecting your information. The Information Commissioner’s Office also has a useful guide for organisations, which outlines the data protection principles.
Support for SMEs from Innovate UK EDGE
If you receive an award, you will be contacted about working with an innovation and growth specialist at Innovate UK EDGE. This service forms part of our funded offer to you.
These specialists focus on growing innovative businesses and ensuring that projects contribute to their growth. Working one-to-one, they can help you to identify your best strategy and harness world-class resources to grow and achieve scale.
We encourage you to engage with Innovate UK EDGE, delivered by a knowledgeable and objective specialist near you.
If you need more information about how to apply or you want to submit your application in Welsh, email email@example.com or call 0300 321 4357.
Our phone lines are open from 9am to 5pm, Monday to Friday (excluding bank holidays).