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Innovation loans are a financial product offered by Innovate UK. They are for UK businesses that want to scale up and grow through innovation, developing new or improved products, processes or services.
Through innovation loans, Innovate UK aims to give businesses support to gain the competitive edge and also grow the UK economy.
Loans may be offered where a business can demonstrate they are suitable and eligible.
They are for late-stage research and development (R&D) projects only. A late-stage R&D project is one which builds on a new idea but has not yet reached the point of commercialisation.
It may include activities such as prototyping, demonstrating, piloting, testing and validation in environments that are representative of real-life operating conditions.
Innovation loans are aimed at UK-based small or medium-sized enterprises (SMEs) that can show that they can afford the interest and repayments on the loan and that they cannot obtain finance from other sources such as banks and equity investors.
Innovate UK is running a pilot programme of loan competitions over 2 years to the end of 2019. A total of up to £50 million is available for business innovation projects.
Interest will be set for the term of all loans at the opening of each loan competition, using the discount rate for financial transactions set by HM Treasury in Public Expenditure Statistical Analyses. Currently, this is 3.7% per year.
Loans will be made by Innovate UK Loans Ltd, a wholly-owned subsidiary of Innovate UK.
You can use a loan to finance a late-stage research and development project categorised as experimental development.
Experimental development includes:
You will need to successfully apply into one of the Innovate UK loan competitions to obtain an innovation loan. It is a competitive process. You could borrow between £100,000 and £1 million, to cover up to 100% of your eligible project costs.
The loan period is up to 10 years. This breaks down as:
Innovation loans are a form of state aid. This is because they have favourable terms, such as the discounted rate of interest, which over the life of the loan will be equivalent to a grant. To be compliant with state aid rules, the level of this ‘grant equivalent’ for experimental development R&D activities must be:
To be eligible for an innovation loan you must:
Individuals, research organisations and large companies are not eligible. Collaboration with other organisations cannot be funded through a loan.
There will be 5 opportunities for businesses to apply for an innovation loan. Up to £10 million will be available in each loan competition.
These pilot loan competitions may be:
Innovation loan competitions will be spaced out over 2 years and run to the end of 2019.
More details on the loan competitions will be made available here as these are confirmed.
To obtain a loan you need to apply into Innovate UK’s competitive loans process. Only one application is permitted from a business per loan competition.
A list of competitions as they arise can be found here.
For further information, including application form and contact details to speak or email an adviser, you can find the links on the right hand side.
Loans of up to £10m
Can fund 100% of your project
Up to 10 Years to Repay