Funding competition Innovation loans: September 2018 open competition

Loans for game-changing innovations with strong commercial potential that will significantly improve the UK economy.

This competition is now closed.

Register and apply online

Competition sections


Innovate UK is to offer up to £10 million in loans to micro, small and medium-sized enterprises (SMEs). Loans are for highly innovative late stage projects with the best game changing and/or disruptive ideas or concepts. There should be a clear route to commercialisation and economic impact.

Projects should aim to develop new products, processes or services (or innovative use of existing ones) believed to be significantly ahead of anything similar in the field.

Your proposal can come from any technology (including arts, design, media or creative industries) and any part of the economy.

Projects must focus on commercialisation, growth or scale up. Priority is given to proposals likely to lead to growth, gains in productivity and/or access to new overseas markets through export.

Projects should last up to 5 years, of which up to 3 years can focus on late stage research and development (R&D), and up to 2 more years on establishing a clear route to commercial success. Loan repayments will be required over a further period of up to 5 years.

Businesses must be able to show that they:

  • can cover interest payments
  • will be able to repay the loan on time
  • need public funding

Funding type


Project size

Loans of between £100,000 and £1 million are available. Projects should last up to 5 years and are expected to start by March 2019.

Who can apply

To take on an innovation loan for a project you must:

  • be a UK based SME
  • carry out your project in the UK
  • evidence that your business is suitable to take on a loan

Individuals, research organisations and large companies are not eligible for innovation loans.

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

Innovation loans will not be offered to businesses in difficulty, as defined in the General Block Exemption Regulations (page 26, section 18). An example of a SME in difficulty would be one over 3 years old whose accumulated losses exceed 50% of their subscribed share capital.

Loans will also be declined for businesses that:

  • 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

An applicant can only submit one application per competition round. If more than one application per round is submitted, only the first application will be considered for assessment.

Any UK business claiming funding must be eligible to receive state aid. If you are unsure please take legal advice. For further information please see our general guidance.

Funding and project details

We have allocated up to £10 million to this competition. This is to provide loans to suitable SMEs to fund innovation projects. This allocation may be reduced if we have committed more in earlier innovation loans competitions.

We will offer loans of between £100,000 and £1 million. This is based on your project proposal and our judgement of the suitability and affordability of a loan for your business.

Innovation loans will be:

1. Available for up to 3 years (the ‘availability period’) when the project is under way, but the exploitation has not yet started. You can borrow in stages (‘drawdowns’) during this period and will pay interest on anything you borrow.

2. Extended for up to 2 years (the ‘extension period’) when the project is focused on developing the commercialisation of the product. 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.

3. Repayable over a maximum of 5 years (the ‘repayment period’) after the availability and extension periods. You will have to repay on a regular quarterly schedule and you will pay interest on the outstanding loan amount.

These are the longest periods we will consider. Your application should propose how long your project will last (including the availability and extension periods) and how long the repayment period should be. These 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.

Interest will be charged at the rate of 3.7% per year on outstanding amounts, payable quarterly in arrears.

We expect to take security where it is available, including a mortgage debenture and charges over assets purchased and intellectual property developed with the proceeds of the loan. 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 loans, are included in the guidance for applicants.

Competition scope

To be in scope, your proposal must demonstrate:

  • a clear game-changing and/or disruptive innovative idea
  • that your idea can lead to innovative products, processes or services that are significantly ahead of others in the field or that it includes prototyping, demonstrating, piloting, testing and validation in environments that represent real life operating conditions
  • a strong and deliverable business plan that addresses (and documents) market potential and needs
  • a team, business arrangement or working structure with the necessary skills and experience to run and complete the project successfully and on time
  • awareness of all the main risks the project will face, with realistic management, mitigation and impact minimisation plans for each
  • sound, practical financial plans and timelines that represent good value for money
  • 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

This competition aims to help businesses overcome barriers to the best cutting edge, game changing innovations becoming a successful commercial reality. This includes making a considerable economic impact and/or resulting in significant, sustainable business growth.

Competition demand is likely to be very high. You will be competing against proposals for some of the most advanced, cutting edge innovations in the UK and beyond. You need to be certain that this is the right competition for your business, and that your proposal is in scope. Proposals most likely to be funded are those which clearly match the scope of this competition.

We are looking to fund a portfolio of projects and businesses, across a variety of technologies and markets. This competition is only for experimental development projects.

Specific themes

Your proposal must:

  • demonstrate a clear, considerable potential to make a significant and positive impact on the UK economy and/or productivity
  • demonstrate realistic, significant potential for global markets

We particularly welcome proposals from innovation-based businesses with significant ambition and potential for growth or scale up.

Project types

Your project should focus on late stage research and development (R&D) activities classified as experimental development. We expect you to be able to show a clear route to commercial success for your project.

You could 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 and will be a form of state aid. 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. The innovation loans guidance contains more information to explain the grant equivalent calculation for an innovation loan.

Find out if your project activities fit the definition of experimental development.

Find out if your business fits the EU definition of an SME.

Projects we will not fund

In this competition, we are not providing grant funding.

We will not fund proposals that:

  • do not fit the classification of experimental development and require significant early stage R&D
  • do not meet the competition scope, loan amount or duration
  • do not address the size, potential for, and access to the market for the innovation
  • cannot present evidence that their idea or concept has the potential to lead to significant return on investment (ROI), positive economic impact, growth and scale-up of the business
17 September 2018
Competition opens
10 October 2018
Liverpool briefing event
15 October 2018
Oxford briefing event
16 October 2018
Cardiff briefing event
18 October 2018
Belfast briefing event
19 October 2018
London briefing event
19 October 2018
Online briefing event
23 October 2018
Glasgow briefing event
14 November 2018 12:00pm
Registration closes
21 November 2018 12:00pm
Competition closes
11 January 2019
Applicants notified
1 March 2019
Estimated project start date and start of drawdowns

Before you start

To apply:

  • register online using the green button
  • read the innovation loans guidance
  • read the guidance for applicants for this competition
  • read the declaration in the guidance for applicants that you will be required to confirm in your application and sign as part of your loan agreement
  • read the summary heads of terms in the guidance for applicants
  • consider attending one of the briefing events listed in ‘Dates’
  • complete and upload your online application on our secure server

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, 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.

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.

An application for an innovation loans competition needs different information from one for a grant application. Even if you have applied for funding from us before, you are strongly advised to read the innovation loans guidance, the specific guidance and the application questions for this competition when completing your application.

Guidance on applying

There are 2 parts to applications:

1. Quality of the project; this will be assessed by independent experts based on part A of the application and the project finance form.

2. Suitability of the business to receive a loan; this will be evaluated by our credit team based on part B of the application and the business financials form.

You need to be successful in both application parts before an innovation loan will be offered. Final terms of the loan offer will be decided by the Innovate UK Loans Ltd credit committee.

We will evaluate the suitability of your business to receive an offer of a loan for your project. This follows a portfolio approach as detailed in the competition process in the guidance.

Background and further information

This competition is the final competition in the £50 million pilot Innovation Loans scheme introduced in autumn 2017 through Innovate UK. Innovation loans will be made through Innovate UK Loans Ltd, a wholly owned subsidiary of Innovate UK.

The Innovation Loans scheme aims to provide finance that is affordable, patient and flexible for later-stage innovation projects that have a clear route to commercial success. They are aimed at innovative micro, small and medium-sized businesses who will be able to manage a loan, but who struggle to access finance from commercial lenders or schemes backed by the British Business Bank.

If you need more information, contact the competition helpline on 0300 321 4357 or email us at

You should read the UK Research and Innovation privacy notice to understand how we handle your personal data.

Need help with this service? Contact us