Innovate UK innovation loans future economy: Round 20

Overview

Innovate UK is offering up to £25 million in loans to micro, small and medium sized enterprises (SMEs). Innovate UK innovation loans are for highly innovative late stage research and development (R&D) projects with the best potential for the future. There must be a clear route to commercialisation and economic impact.

Scope

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 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.

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 five years, including both the R&D and commercialisation phases. Projects are expected to start by 1 September 2025. 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

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

Funding

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 three 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 two 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 five 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.

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.