Funding competition Innovation loans: infrastructure systems

For first of a kind deployment, businesses can apply for loans to commercialise innovative technologies in infrastructure systems.

This competition is now closed.

Register and apply online

Competition sections

Description

Innovate UK is to provide up to £10 million in loans to small to medium enterprises (SMEs) for innovative infrastructure systems projects.

The aim of this competition is to offer a loan to help SMEs overcome barriers to scaling up innovation in infrastructure systems. It will enable businesses to demonstrate first commercial deployment at scale and take their innovations to market by proving that:

  • the innovation delivers the expected outcomes
  • there is a clear market opportunity for their business
  • applicants are ready to scale up their business and their innovation

Projects must show significant late stage innovation and clearly show how they are working with end users and problem owners. Projects should be in one of our priority areas, which are:

  • smart infrastructure
  • urban living
  • energy supply and systems
  • connected transport

Projects should last up to 5 years, of which up to 3 years can focus on research and development (R&D), and up to a further 2 years are available to establish 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

Loan

Project size

Loans of between £100,000 and £1 million are available.

Find out if you are eligible to apply

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

  • be a UK based SME
  • carry out your project in the UK

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.

Projects that we won't fund

In this competition, we are not providing grant funding.

Innovation loans will not be offered to:

  • businesses we consider unable to afford the interest and repayments on the loan
  • businesses that have not demonstrated that they are unable to obtain finance from other sources on suitable terms

We will not lend for:

  • innovations that are deemed too early for an innovation loan and require significant early stage R&D
  • incremental innovations unlikely to significantly improve UK economic and SME growth
  • connected transport innovations that can only be applied to propulsion and onboard systems in a single mode of transport (for example, only automotive, rail, air, or marine vehicles or vessels)
  • connected transport proposals for new physical infrastructure, unless they encourage change across complex transport systems
  • fossil fuels, including exploration, appraisal, production, processing and transport

Funding and project details

We have allocated up to £10 million to make loans to suitable SMEs to fund innovation projects in this competition.

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. We may consider larger loans on an exceptional basis, but you must contact us before making an application.

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 amount of the loan.

These are the longest periods we will consider. Your application should propose the most suitable timings for your project and business. We will consider the suitability of the timings in any loan offer that we make to you.

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

We expect to take security where it is available, for example 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.

Project types

Your project should focus on later stage 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 small business
  • up to 35% if you are a medium-sized business

We expect that most innovation loans will meet this requirement. The guidance for applicants contains more information, including a worked example, to illustrate 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.

Competition scope

We want to help SMEs to demonstrate their innovations and take them to market by proving:

Your project must show significant late stage innovation (in other words, be at an experimental development stage). It must also clearly show how you are working with end users, problem owners (including local authorities), infrastructure owners or those who will ultimately buy your innovation in one of our priority areas:

  • smart infrastructure
  • urban living
  • energy supply and systems
  • connected transport

Your proposal needs to be for a first commercial deployment at a scale sufficient to demonstrate that the solution delivers the real world outcome it was designed for. Therefore your proposal must:

  • be commercial, involving real customers or end users
  • have low technical risks. The aim should not be to develop technical capabilities but to demonstrate whether the solution delivers the expected outcome
  • have a large potential. It will, if proven, be replicated many times, creating significant business growth

Specific competition themes

There are 4 specific themes for this innovation loan competition.

1. Smart infrastructure

Smart infrastructure solutions will bring the digital and physical worlds together. They must add intelligence to physical infrastructure, or the design process, to improve:

  • whole-life cost or performance
  • resilience, security or sustainability

2. Urban living

An urban living solution must address challenges citizens face in urban areas. It must cover more than one urban infrastructure system and provide significant improvements in costs and user experience. Urban infrastructure systems include:

  • ‘hard’ systems, such as energy, transport, waste, water and communication
  • ‘soft’ systems, such as security, law and justice (for example, public order and safety), health, wellbeing, social care and education
  • ‘environmental’ systems such as green spaces and waterways

You must demonstrate that your solution is:

  1. Citizen-centered. Solves problems which are important to cities and which deliver tangible benefits to all citizens.
  2. Resilient and sustainable. Designed and integrated in a way that makes it able to adapt to changes or reduce their negative effects.

3. Energy supply and systems

We are looking for innovations that improve value proposition, energy affordability and security, and reduce emissions. These could include:

  • energy supply solutions, such as carbon abatement, renewable energy technologies, nuclear fission (including decommissioning), and hydrogen and fuel cells.
  • solutions that can flexibly match changing energy supply and demand profiles. An example of this is smart systems that integrate generation and demand at a local, regional or national scale. Another example is methods to shift peak energy use, including the storage or management and optimisation of multiple sources of energy supply and/or demand, to encourage flexible and efficient energy use

We encourage solutions that optimise performance across different energy vectors (such as electricity and heat).

4. Connected transport

We are looking for solutions that move people and goods more efficiently, and make transport more secure, user-centric and accessible.

You application must address one of these 3 areas:

  • capacity and congestion across different modes of transport. This includes freight and logistics (including ports), aviation (customer experience and connection services) and multi-modal passenger transport. We encourage solutions in smart asset management, mobility as a service and the end-to-end journey (such as parking or increased connectivity between modes of transport).
  • accessible and safe transport for all sectors of society. We welcome projects that encourage innovation in accessible transport and which consider changes in people’s travel behaviour.
  • sustainability, including improving air quality, reducing carbon emissions and preparing connected transport for future challenges
8 November 2017
Competition opens
16 November 2017
Watch the briefing event for applicants.
10 January 2018 12:00pm
Registration closes
17 January 2018 12:00pm
Competition closes
23 February 2018
Applicants notified
3 April 2018
Earliest project start date and start of drawdowns.

Before you start

To apply:

We will not accept late submissions. Your application is confidential.

Entering into a loan agreement with us is a financial commitment. You will 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 that you will be able to fulfil the repayment obligations under the loan. You should consider taking 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 undertake 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.
At the end of the application process (and again before entering into a loan agreement) you, or the person appointed by your company to act for it, will be required to enter into a legally binding declaration. Again, you should consider taking independent advice on the content of this declaration.
An application for an innovation loans competition requires 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 specific guidance and application questions for this competition when completing your application.

Guidance on applying

There are 2 parts to applications:

1. Quality of the project

2. Suitability of the business to receive a loan

Success is required in both application parts before an application 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 will follow a portfolio approach as detailed in the competition process in the guidance.

Read the general guidance for applicants carefully before you apply. It contains important information on how to prepare and submit an application and will help your chances of submitting a quality application.

An application for an innovation loans competition requires 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 specific guidance and application questions for this competition when completing your application.

Background and further information

Innovate UK is working to broaden the range of innovation finance support available to businesses, so they can access funding at all stages of innovation. The lack of funding available to innovative businesses at the right time is a barrier to their productivity and growth.

Innovations need different types of funding support depending on how close they are to market. Innovation loans are, we believe, most useful for innovations near to market, whereas grants are more suitable for earlier stage, riskier innovations.

This competition is part of 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 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 support@innovateuk.gov.uk

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