Innovate UK innovation loans future economy: round 12

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 1 June 2024. 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.

You are responsible for entering your own project costs in the application.

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

Subcontractors

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.

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

These periods must 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 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. The present value is determined at the date of commitment of the 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:

• prototyping
• demonstrating
• piloting
• testing
• validation

These can be in environments that represent real life operating conditions.

We are also particularly interested in receiving applications from diverse businesses involving communities that are typically under-represented. This includes 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

Portfolio approach
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:

Net Zero

• energy
• 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

Technology families

• 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

9 November 2023

Publication date

9 November 2023

Financial Submission guidance and guide to a Good Project Application: access the resources website

9 November 2023

Competition opens

22 November 2023

Online briefing event: Register to Attend

27 November 2023

Deep dive financial workshop 1

5 December 2023

Deep dive financial workshop 2

11 December 2023

Deep dive financial workshop 3

10 January 2024 11:00am

Competition closes

23 February 2024

Applicants notified

5 April 2024

Final lending decisions notified

1 June 2024

Expected project start date

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 22 November 2023. This webinar will provide essential information on innovation loans, including the scope of the programme, the application process for 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 carry out checks on the financial standing of your business.

This might include, but will not be limited to, checks with credit reference agencies (this may be recorded on your credit 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.

Read more about the application process here.

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 micro, small and medium sized enterprises (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.

If you need more information about how to apply or you want to submit your application in Welsh, email support@iuk.ukri.org or call 0300 321 4357.

Our phone lines are open from 9am to 12pm and 2pm to 5pm, Monday to Friday (excluding bank holidays).