Grant information


closed    Opened: 10 March 2022   |   Closes: 13 April 2022

Overview

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.

Description

Your project must lead to 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.

Innovate UK is particularly interested in projects that focus on 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 four competitions with the next round opening on the day the previous round closes. The final round 4 will close on 13 July 2022.

  • round 1 opens 10 March 2022 (this competition)
  • round 2 opens 14 April 2022
  • round 3 opens 12 May 2022
  • round 4 opens 9 June 2022

In applying to this competition, you are entering into a competitive process. This competition closes at 11am UK time on the deadline stated.

Project size

Loans can be for between £100,000 and £2 million.

Who can apply

Your project

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 July 2022.

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.

Individuals, large companies, not for profits, charities, academic institutions, and research organisations are not eligible for innovation loans.

Only single businesses can receive loans, so collaboration with other organisations cannot be funded in this competition.

Lead organisation

To lead a project your organisation must:

Academic institutions cannot lead or work alone.

Project team

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 also provide a detailed rationale, evidence of the potential UK contractors you approached and the reasons why they were unable to work with you.

Innovate UK expects all subcontractor costs to be justified and appropriate to the total eligible project costs. Innovate UK will not accept a cheaper cost as a sufficient reason to use an overseas subcontractor.


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.

Previous applications

You can use a previously submitted application to apply for this competition.

Innovate UK will not award you funding if you have:

Subsidy control (and State aid where applicable)

This competition provides funding in line with the UK's obligations and commitments to Subsidy Control. Further information about the UK Subsidy Control requirements can be found within the EU-UK Trade and Cooperation agreement and the subsequent guidance from the department of Business, Energy and Industrial Strategy (BEIS).

Innovate UK is unable to award organisations that are considered to be in financial difficulty. Innovate UK will conduct financial viability and eligibility tests to confirm this is not the case as part of our evaluation of the suitability of your business to take on a loan.

EU State aid rules now only apply in limited circumstances. Please see their general guidance to check if these rules apply to your organisation.

If you are applying for an award funded under State aid Regulations, the definitions are set out in the https://ec.europa.eu/growth/smes/sme-definition_en

Further Information

If you are unsure about your obligations under the UK Subsidy Control regime or the State aid rules, you should take independent legal advice. Innovate UK is unable to advise on individual eligibility or legal obligations.

You must make sure at all times 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.

If there are any changes to the above requirements that mean Innovate UK needs to change the terms of this competition, Innovate UK will tell you as soon as possible.

Funding

Innovate UK has allocated up to £25 million to fund innovation projects across the four rounds of this competition.

They 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 Innovate UK will consider and, since the overall term of the loan must not exceed 7 years, your application should propose how long your project (which includes the availability and extension periods) will last and how long the repayment period should be. These should be based on the needs of your business. Innovate UK will consider the suitability of your proposed timings in any loan offer that they make to you.

Innovate UK expects to take security in the form of a mortgage debenture. They will not require personal guarantees.

More details of their 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

Innovate UK expects that most innovation loans will meet this requirement.

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Innovate UK Smart Grants

OPEN   UK registered organisations can apply for a share of up to £25million for game-changing and commercially viable R&D innovation that can significantly impact the UK economy. This funding is from Innovate UK, part of UK Research and Innovation. 

Opened: 17/01/2022

Closed: 17/01/2022