Innovate UK has announced the launch of its Innovation Loans Future Economy Competition: Round 19, offering up to £25 million in loans to UK-registered micro, small, and medium-sized enterprises (SMEs). This initiative aims to support highly innovative late-stage research and development (R&D) projects that demonstrate strong commercial potential and the capacity to significantly benefit the UK economy.

Key Details of the Competition

• Loan Amounts: Businesses can apply for loans ranging from £100,000 to £2 million to cover eligible project costs.
• Project Duration: Projects may last up to five years, encompassing both the R&D and commercialisation phases. Successful applicants are expected to commence their projects by 1^st July 2025.
• Application Timeline: The competition opened on 9^th January 2025 and will close on 5^th March 2025 at 11:00 am. Subsequent rounds are planned, with Round 20 opening on 6 March 2025 and closing on 7 May 2025.

Eligibility Criteria

To be eligible for the innovation loan, applicants must:

• Business Status: Be a UK-registered SME.
• Project Scope: Propose a project that leads to innovative new products, processes, or services significantly ahead of current market offerings, or present an innovative application of existing products, processes, or services. Projects can also involve new or innovative business models. The focus should align with one or more of the future economy areas outlined in the Innovate UK plan for action.
• Financial Justification: Demonstrate a clear need for public funding, the ability to cover interest payments, and the capacity to repay the loan on time.

Application Process

Applicants are required to submit a comprehensive proposal detailing the business need, technological challenge, or market opportunity their innovation addresses. The proposal should include:

• Project Motivation: Clearly articulate the main motivation for the project, including the business need, technological challenge, or market opportunity it responds to.
• Innovation and Market Differentiation: Describe how the project will lead to products, processes, or services that are significantly ahead of others currently available, including an understanding of the current state of the art and how the innovation will differentiate from competitors.
• Commercialisation Strategy: Outline the route to market, target customers or end-users, and how the innovation will lead to commercial success, including increased revenues or cost reductions.
• Project Management and Risk Mitigation: Provide a detailed project plan, including work packages, milestones, and a risk register identifying main risks and uncertainties, along with mitigation strategies.

Applicants must also complete a business and financial submission, including historic and forecast financial statements, to support their suitability to borrow. This includes profit and loss accounts, balance sheets, and cash flow forecasts covering the full loan term.

Assessment and Evaluation

Applications will be evaluated based on the quality of the project and the suitability of the business to receive a loan. The assessment process includes:

• Project Proposal Assessment: Independent assessors will score each question in the project proposal, focusing on aspects such as innovation, market opportunity, project management, and value for money.
• Initial Credit Evaluation: Innovate UK’s Credit team will conduct an initial evaluation of the business’s financial standing and ability to repay the loan.
• Progress Panel: A panel will review the innovation score and credit evaluation to decide on progression to detailed credit evaluation.
• Detailed Credit Evaluation: A thorough analysis of the business’s financials, including a management presentation to the Credit Committee, may be required.

The final lending decision rests with the Credit Committee, which may include specific conditions. Feedback will be provided to all applicants, whether successful or unsuccessful.

Support and Resources

Innovate UK offers various resources to assist applicants, including recorded webinars on application guidance and financial submission. Applicants are encouraged to prepare well in advance, seek financial and legal advice, and ensure all parts of the application are completed accurately and submitted on time.

For more information on the competition process, contact RedKnight today.