Innovate UK has announced its latest round of the Innovation Loan competition which offers a flexible, repayable funding option tailored for late-stage innovation projects. This competition is designed to support ambitious, growth‑oriented UK businesses looking to move groundbreaking products, services or models from development into commercial reality. Here’s everything you need to know about this opportunity presented in an accessible and engaging format.

Summary

Round 23 provides funding to support SMEs through both research and early market readiness:

  • Loans ranging from £100,000 to £5,000,000, allowing full coverage of eligible project costs.
  • Extended project duration of up to five years, with a maximum total loan term allowed of seven years (including repayment and other phases).
  • Generous repayment structure featuring interest‑only draws at a rate of 3.7% per annum during the project period, with deferred interest of an additional 3.7% accumulating and becoming payable during the repayment period at 7.4% per annum.
  • Allows for extensive pre‑commercialisation costs, such as tooling, market testing, production scale‑up, capital equipment, and up to 20% working capital support, especially welcome to projects making the leap to market.

Eligibility Criteria

To qualify for Round 22, applicants must meet the following requirements:

  • Be a UK‑registered micro, small or medium‑sized enterprise (SME).
  • Carry out the project in the UK and plan to exploit its results within the UK.
  • Demonstrate financial suitability for a loan, including ability to repay and justification for public funding.
  • Be a single business; collaboration is not permitted (though subcontracting is allowed with proper justification).
  • Innovate UK will conduct a credit evaluation and assess whether your business can fulfil the loan obligations.
  • The competition encourages applications from businesses that are underrepresented, including those in regions outside major innovation clusters, women‑led teams, ethnic minority groups, those with non‑traditional educational backgrounds and people with disabilities.

Scope of Funded Projects

The Innovation Loan competition targets late-stage innovation efforts intended to create significant economic and societal benefits:

  • Projects should deliver innovative products, services or processes, substantially ahead of what currently exists, or demonstrate innovative business models.
  • Must align with Innovate UK’s “future economy” themes, such as net zero, health and wellbeing, next generation digital technologies, advanced materials, AI, robotics, quantum, and more.
  • Applicants must clearly show:
    • A compelling, innovative concept.
    • A sound business plan evidencing market need and strong commercial potential.
    • A capable team to drive the project to completion.
    • Risk awareness with mitigation plans.
    • Robust financials that represent good value and provide a repayment strategy.
    • Why the project cannot be self‑funded or supported through private or other public funding.
  • The inclusion of a pre‑commercialisation workstream is encouraged to cover prototyping, testing, tooling, inventory generation, and up to 20 percent working capital, enabling smoother transition to market.

Key Dates and Timeline

Here are the important milestones for Round 23:

  • Competition opened on 4th September 2025.
  • Pre‑application briefing webinar to be held on 17th September 2025, with recordings and slides available to help applicants understand the process and changes.
  • Financial deep‑dive workshops on 24th September, 29th September, and 9th October 2025, focusing on revenue forecasts, working capital planning and capitalisation—recommend participation for applicants serious about their financial submission.

Why You Should Consider Applying

Innovate UK’s Innovation Loan Round 23 offers a compelling package for SMEs advancing innovation to commercial deployment:

  • Access to sizeable capital (up to £5 million) without equity dilution or personal guarantees; Innovate UK takes a secured debenture, not personal assets.
  • Interest‑only drawdowns with deferred interest create a cash flow advantage during development and validation phases, helping you preserve runway.
  • Funding covers both R&D and pre‑commercial activities, making it easier to prototype, validate, tool up and prepare for launch.
  • Offers an inclusive approach, encouraging applications from diverse and underrepresented founders and regions.
  • Engaging briefing sessions and workshops support applicants in strengthening their submissions and understanding evaluation criteria.

Why Apply?

Innovate UK’s Innovation Loans Round 23 is a strategic opportunity for UK SMEs with mature, market-ready innovations. The combination of generous loan sizes, flexible terms, inclusive eligibility, and practical financial support makes this round especially attractive.

If your business is driving late-stage R&D with a clear route to commercial success and societal benefit, this may be the funding pathway you need to cross the gap to market.

What Next?

For a FREE consultation to discuss your project, contact RedKnight today.

Other posts you might like