We have allocated up to £210 million for innovation continuity loans and will accept applications in a series of competitions.
We will offer loans of between £250,000 and £1.6 million. This is based on your project proposal and our judgement of the suitability and affordability of a loan for your organisation. The Innovate UK Loans Ltd credit committee will decide the final terms, amount and length of the loan offer.
Innovation continuity loans will be:
1. Available for up to 2 years (the ‘availability period’) until the agreed end date of your project, provided that no drawdowns will be permitted after 31st March 2022. 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 we will consider and since the overall term of the loan must not exceed 7 years, 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 organisation. We will consider the suitability of your proposed timings in any loan offer that we make to you.
We expect to take security where it is available in the form of a mortgage debenture. We will not require personal guarantees.
A summary ‘heads of terms’ document setting out the main terms and conditions of the loans is in the terms and conditions for this competition.
Innovation continuity loans are a form of State aid under the COVID-19 Temporary Framework for the UK.
You could get a loan of up to 100% of your project costs and other, justified, R&D related 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. 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 the European Commission’s reference rates for interest) and the cost of an innovation continuity loan.
Aid may be granted to undertakings that were not in difficulty (within the meaning of Article 2(18) of the General Block Exemption Regulation) on 31 December 2019, but that faced difficulties or entered in difficulty thereafter as a result of the COVID-19 outbreak. The Temporary Framework has been extended to provide public support to micro and small companies in difficulty. Micro and small companies are exempt from this test unless:
- they are in insolvency proceedings
- have received rescue aid that has not been repaid
- or are subject to a restructuring plan under State aid rules
Unless you are exempt as a micro or small company, you must complete a State aid declaration in the Early Metrics Survey found in the ‘how to apply’ section to confirm that your organisation was not an undertaking in difficulty on 31 December 2019.
The cumulative aid that any organisation may receive under the Temporary Framework must not exceed 800,000 euros in total. For undertakings in the agriculture and fisheries sector, the aid limits are lower: 120,000 euros per undertaking active in the fishery and aquaculture sector or 100,000 euros per undertaking active in the primary production of agricultural products. See paragraphs 22 and 23 of the Temporary Framework referred to below for more information on the limits and conditions for undertakings in the agricultural, fisheries and aquaculture sectors.
The gross grant equivalent of an innovation continuity loan will count towards these limits. We expect that most innovation loans, on their own, will meet this requirement. Any aid provided under de minimis is in addition to this allowance. If you are unsure if any previous funding fell under the Temporary Framework, please contact the funding body who issued you with your award.
All applicants must provide a simple declaration to this effect in the Early Metrics survey found in the ‘How to apply’ section.
Please refer to the:
It is your responsibility to make sure that your organisation is eligible to receive state aid. We strongly recommend that you seek independent legal advice before applying into, and accepting the terms of, this funding award.