Funding competition Innovation continuity loans: Strand 2 November 2020 follow-on competition

Innovate UK can provide additional COVID-19 innovation continuity loans for the continuation of planned or existing innovation activity.

This competition is now closed.

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Competition sections


Innovate UK is offering up to £210 million in loans to micro, small and medium-sized enterprises (SMEs) and third sector organisations that have a challenge in continuing, completing or following on an innovation project. Loans are for organisations that find themselves facing a sudden shortage or even unavailability of funds resulting directly from the COVID-19 pandemic.

There are 3 parallel strands for innovation continuity loans:

We are looking to support highly innovative late stage projects with a clear route to commercialisation and economic impact.

Your project must aim to develop new products, processes or services which are significantly ahead of anything similar in the field. You can also propose an innovative use of existing products, processes or services.

Applications can come from any area of technology and be applied to any part of the economy.

Your project must focus on commercialisation, growth or scale up. We will give priority to proposals likely to lead to growth and gains in productivity.

You must be able to show that you:

  • are facing a sudden shortage or even unavailability of funds resulting directly from the COVID-19 pandemic
  • can cover interest payments
  • will be able to repay the loan on time
  • need public funding

The competition closes at 11am UK time on the deadline stated.

Funding type


Project size

Loans of between £250,000 and £1.6 million are available.

Who can apply

Your project

Loans of between £250,000 and £1.6 million are available to fund your project’s eligible costs. We may consider further reasonable costs arising from an increase in the cost of delivering your R&D activity as a result of COVID-19 that are not already covered by other government support.

Projects must last up to 3 years and are expected to start by 1 March 2021.

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

  • be a UK registered SME or third sector organisation
  • have successfully completed a project supported by an Innovate UK award in the last 36 months
  • carry out your project in the UK
  • intend to exploit the results from or in the UK
  • give evidence that your organisation is suitable to take on a loan

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

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


Subcontractors are allowed in this competition and must be selected through a participant’s normal procurement process. Subcontractors can be from anywhere in the UK. If an overseas subcontractor is selected, a case must be made as to why no UK-based subcontractor can be used including a detailed rationale, evidence of UK companies that have been approached and reasons why they were unable to do so. A cheaper cost is not deemed as a sufficient reason to use an overseas subcontractor.

Multiple applications

Your organisation can only submit one application per competition round. 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.

We will not award you funding if you have:


We have allocated up to £210 million for innovation continuity loans for applications submitted in this competition and in a series of previous 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 up to 31st March 2022 or until the agreed end date of your project if earlier (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 we will consider and since the overall term of the loan must not exceed 7 years, your application should propose how long your project (including the availability and extension periods) will last 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.

State aid

Innovation continuity loans are a form of State aid under the COVID-19 Temporary Framework..

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 an exempt 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.

Your proposal

The purpose of this competition is to help businesses and third sector organisations overcome barriers to their innovations becoming a successful, commercial reality, particularly where they find themselves facing a sudden shortage or even unavailability of funds resulting directly from the COVID-19 pandemic.

Your proposed project must follow on from a recently completed project supported by an award from Innovate UK ending within the last 36 months. We are looking for organisations who can demonstrate that their recently completed projects with Innovate UK have made the best progress in innovation and that their follow-on projects have the best potential for the future.

Your proposal must demonstrate:

  • a clear game-changing and/or disruptive innovative idea
  • a robust 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 and business will face, with realistic plans to manage, mitigate and minimise the impact of each of these
  • 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

We are looking to fund a portfolio of projects and organisations, across a variety of technologies and markets.

Projects can last up to 3 years in length. For the first 12 months we expect your project to focus on research and development (R&D). For the remainder of the project we expect you to establish a clear route to commercial success. We will require loan repayments over a further period of up to 5 years. However, the overall term of the loan must not exceed 7 years.

Your application will be evaluated on:

  • the quality of your previously completed project with us including completion of an independent accountants report (IAR)
  • our satisfaction with the delivery of that project, evidenced by our own reporting
  • the quality of your project proposal and how it enhances the output of your previous project
  • our judgement on the suitability of your organisation to receive an offer of a loan

We will decline loans for organisations which:

  • 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

Specific themes

We are looking for applications that show:

  • an appropriate and evidenced loan request
  • a clear route to commercial success with clear, considerable potential to make a significant and positive impact on the UK economy and/or productivity
  • realistic, significant potential for global markets
  • a strong management team
  • a strong rationale for how your project enhances the output of a recently completed project supported by an award from Innovate UK
  • evidence of impact from the COVID-19 pandemic such as reduced access to capital, cancelled orders or increases to your costs
  • why you are unable to fund the project from your own resources or other forms of public or private-sector funding amidst the current financing disruptions caused by the COVID-19 pandemic
  • that this funding will enable the project to be carried out despite the impact of the COVID-19 pandemic

Research categories

Projects we will not fund

In this competition we are not providing Innovation continuity loans to organisations:

  • to continue and complete a live project with an Innovate UK award
  • to carry out entirely new project activity

We will not provide funds to match the grant funding of any other projects you are currently or looking to be involved in.

6 November 2020
Competition opens
9 December 2020
Online briefing event: view recording here
13 January 2021 11:00am
Competition closes
6 April 2021 2:30pm
Applicants notified

Before you start

Innovate UK is unable to award funding to organisations meeting the condition known as undertakings in difficulty (UiD) on 31 December 2019, unless you are an exempt micro or small company.

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 organisation, that your organisation 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.

Data Protection

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 organisation. 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.

The principles that Innovate UK follows when we collect, hold or use your personal information and how you can check what details we hold are set out in Innovate UK’s personal information charter.

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 Innovate UK before, you are strongly advised to read the innovation loans guidance before completing your application.

What we will ask you

There are 2 parts to applications:

  1. Quality of the project: this will be evaluated by our innovation teams based on the quality of your completed project with us, our satisfaction with the delivery of that project and our evaluation of the quality of your follow-on project proposal in this application.
  2. Suitability of the organisation to receive a loan: this will be evaluated by our credit team based on your answers to the Early Metrics startup high growth index survey and your historic and forecast financial statements. You must also complete this survey, which is available here (opens in a new window). We may need further information to reach a final decision, at which point we may contact you. However, we may also decide against offering a loan if the information you provide does not make an adequate case for your suitability for a loan.

You must complete and submit both parts of the application.

You need to be successful in both parts of the application before we will offer an innovation continuity loan. The Innovate UK Loans Ltd credit committee will decide the final terms of the loan offer.

1. Project details

Overview and Project summary

Briefly describe your organisation and its current position in the marketplace. Describe your vision for growth and how you plan to achieve this. Describe your project briefly and be clear about what makes it innovative.

Your answer can be up to 400 words long.

Equality, diversity and inclusion

Please complete the EDI survey and then select yes in the application question. We collect and report on equality, diversity and inclusion (EDI) data to address under-representation in business innovation and ensure equality, diversity and inclusion across all our activities.

The survey will ask you questions on your gender, age, ethnicity and disability status. You will always have the option to ‘prefer not to say’ if you do not feel comfortable sharing this information.

Public description

Describe your project in detail, and in a way that you are happy to see published. Do not include any commercially sensitive information. If we award your project funding, we will publish this description. This could happen before you start your project.

Your answer can be up to 400 words long.


Describe how your project fits the scope of the competition. You must provide your recently completed Innovate UK project number as part of your answer.

If your project is not in scope it will not be eligible for funding. It will be immediately rejected and will not be sent for validation.

Your answer can be up to 400 words long.

2. Application questions

Our innovation teams will evaluate your answers based on the quality of your completed project with us, our satisfaction with the delivery of that project and our evaluation of the quality of your follow-on project proposal.

Your answer to each question can be up to 800 words long. Do not include any website addresses (URLs) in your answers.

Question 1. Project proposal:

What is the business need, technological challenge or market opportunity behind your innovation? What approach will you take and where will the focus of the innovation be?

Describe or explain:

  • the main motivation for the follow-on project
  • the business need, technological challenge or market opportunity and how your project will respond to this
  • the wider economic, social, environmental, cultural or political challenges which are influential in creating the opportunity
  • the nearest current state-of-the-art, including those near market or in development, and its limitations, how you will improve on this and your freedom to operate
  • the nature of the outputs you expect from the project and how these will help you to target the need, challenge or opportunity identified
  • the current level of readiness, how it is likely to change over the life of the project and how it is likely to lead to project success
  • how the project will make you more competitive and lead to commercial success
  • how this project follows on from your recently completed project and how it fits with your current product, service lines or offerings
  • the impact COVID-19 has had on businesses or sectors that are a focus of your project

You can submit one appendix. It can include diagrams and charts to help support your answer. It must be a PDF, can be up to 2 A4 pages long and no larger than 10MB in size. The font must be legible at 100% zoom.

Question 2. Market opportunity

What does the market you are targeting look like and how are you going to grow your organisation as a result of the project?

Describe or explain:

  • the markets (domestic, international or both) you will be targeting in the project and their size, structure and dynamics
  • the target markets’ main supply or value chains and business models, and any barriers to entry that exist
  • your current position in the markets and supply or value chains outlined, and whether you will be extending or establishing your market position
  • your target customers or end users, and the value to them, for example why they would use or buy your product
  • your route to market, particularly if COVID-19 has changed market dynamics
  • how you are going to profit from the innovation, including increased revenues or cost reduction

Question 3. Project delivery

Who is in the project team, what are their roles and how will you manage the project effectively?

Describe or explain:

  • the roles, skills and experience of all members of the project team that are relevant to the approach you will be taking, including any roles you will need to recruit for, and taking into account the impact of COVID-19 restrictions on the team structure
  • the resources, equipment and facilities needed for the project and how you will access them, particularly in the light of any continuing COVID-19 restrictions
  • the details of any vital external parties, including sub-contractors, who you will need to work with to successfully carry out the project
  • the resources available to take the project to market after the development period, including commercial resources
  • the main work packages of the project, indicating the total cost of each one
  • your approach to project management, identifying any major tools and mechanisms you will use to get a successful and innovative project outcome
  • the management reporting lines
  • your project plan in enough detail to identify any links or dependencies between work packages or milestones, taking into account the possible impact of further COVID-19 restrictions

You can submit an appendix containing a short summary of the main people working on the project to support your answer. It must be a PDF, can be up to 4 A4 pages long and no larger than 10MB in size. The font must be legible at 100% zoom.

You can submit a project plan or Gantt chart as an appendix to support your answer. It must be a PDF, can be up to 2 A4 pages long and no larger than 10MB in size. The font must be legible at 100% zoom.

Question 4. Project risks

What are the main risks for this project?

Describe or explain:

  • the main risks and uncertainties of the project, including the technical, commercial, managerial and environmental risks, providing a risk register if appropriate
  • how you will mitigate these risks
  • any output likely to be subject to regulatory requirements, certification, ethical issues and so on, and how you will manage this
  • what methods of future proofing you have considered against risks arising from COVID-19 restrictions and other possible national and global factors
  • any project inputs that are critical to completion, such as resources, expertise, data sets and if they are affected by COVID-19

You can submit a risk register as an appendix to support your answer. It must be a PDF, can be up to 2 A4 pages long and no larger than 10MB in size. The font must be legible at 100% zoom.

Question 5. Project costs and value for money

How much will the project cost and how does it represent value for money for your organisation and the taxpayer?

Describe or explain:

  • the total eligible project costs and the loan you are requesting in relation to the goals of the project and your organisation
  • how this project represents value for money for you and the taxpayer
  • how it compares to what you would spend your money on otherwise
  • any sub-contractor costs and why they are critical to the project

3. Finances

For full details on what costs you can claim please see our project costs guidance. We may consider further reasonable costs arising from an increase in the cost of delivering your R&D activity as a result of COVID-19 that are not already covered by other government support.

Background and further information

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 or third sector organisations who will be able to manage a loan, but who struggle to access finance or need to raise funds alongside offers from commercial lenders or schemes backed by the British Business Bank.

Innovate UK is working with the Enterprise Europe Network (EEN) to boost its capacity to provide advice to innovative organisations, including around identifying your funding and finance needs and how to produce credible information in making an application to Innovate UK’s schemes. Information about this support is available here.

If you have any questions about the requirements of this competition or if you need more information, email us at or call our customer support services on 0300 321 4357. Our phone lines are open from 9am to 11:30am and 2pm to 4:30pm, Monday to Friday (excluding bank holidays).

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