Small businesses with ground breaking ideas will be able to access new innovation loans from today, Innovate UK has announced.
The first competition for the government-backed loans was launched at the UK’s flagship innovation conference, INNOVATE 2017 and will allow businesses to access between £100,000 and £1 million on flexible, affordable terms.
This is the first time Innovate UK has offered a new funding mechanism other than matched grants. Innovation loans will offer affordable, flexible funding for later-stage research & development projects with a clear route to commercial success.
Speaking at Innovate 2017 at the NEC Birmingham – where Innovate UK is hosting up to 3,000 creators, innovators and investors from all over the world – the organisation’s chief executive, Dr Ruth McKernan CBE, said:
“We know that many businesses with ground breaking ideas struggle to get them to market. Our new innovation loans will help businesses scale up, and give them a clear route from prototype to making new products and services available to customers.”
The first competition opens today to support smart infrastructure, urban living, energy supply and systems and, connected transport projects. The first wave will make up to £50 million available over 2 years.
Innovate UK has done extensive research to understand the needs of scale-ups and believes the loans will be especially helpful to those companies. Last week it published a report detailing its findings: https://www.gov.uk/government/
Loans will be offered to growth-oriented SMEs that are able to demonstrate that they have a high-quality innovation project, that they will be able to afford the interest payments and subsequent repayments associated with a loan and that they need public sector support as they are unable to access finance for their project on standard commercial terms.
Notes for editors:
- Loans will be priced at the HM Treasury discount rate – currently 3.7% fixed. The loan will allow for up to 3 years to finalise the development of the product or service, a further 2 years to commercialise and, finally, up to 5 years to repay – although typically we expect terms of 5-7 years;
- If early evaluations of the pilot indicate that innovation loans are successful in these operational terms, as well as providing indications of good innovation outcomes, then consideration may be given to scaling the programme in the future