Innovate UK Innovation Loans Future Economy

What is the loan available for?

Innovate UK is offering up to £25 million in loans to micro, small and medium-sized enterprises.

Loans are for businesses with highly innovative late-stage research and development projects with a clear route to commercialisation and economic impact.

Projects must lead to new products, processes or services that are significantly ahead of others currently available or propose an innovative use of existing products, processes or services. It can also involve a new or innovative business model.

They are particularly interested in projects that focus on the future economy areas included in Innovate UK plan for action.

Who are loans for?

Businesses that are:

• Carrying out late-stage R&D
• Have a clear route to commercial success
• Innovative and growth orientated
• ‘Scaling’ rather than ‘starting’
• Credit constrained
• Unable to fund the project from their own resources or other forms of private-sector funding.

The funding is available for late stage R&D (experimental development) projects.

An innovation loan can cover up to 100% of the eligible project costs of your project.

Any eligibility criteria?

You must provide historic and forecast financial information so that they can form a judgement about your suitability to take on a loan of the amount and for the period you have requested.

During the period of the Loan you will be required to adhere to some covenants:

• Liquidity Ratio of 1.1x throughout the loan. This means the business’ current assets exceed its current liabilities by 10% and shows the business is able to meet the interest payments in in the availability and extension periods and thereafter meet loan repayments.
• Debt Service Coverage Ratio of 1.2x throughout the repayment period. This shows your earnings before interest, tax, depreciation and amortisation (EBITDA), effectively your free cash flow, will be 1.2X your interest and repayments. The financial Covenants are tested quarterly.
• Project monitoring – This will be through a Project Monitoring Officer. They will make sure that your project is on track and performing well to achieve success at the end of the project.
• Provision of Quarterly management accounts
• Provision of Annual accounts (within 6 months of year-end)
• Failing to meet the covenants would constitute a breach of the terms of the loan agreement. If not rectified within the period permitted in the loan agreement, this is likely to constitute a default, which might lead to a demand for repayment.

What loan amounts are available?

Innovate UK is offering up to £25 million in loans.

Who provides the loan?

Innovate UK

How to apply?

For more information or to apply click here!