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.