European Commission - Internal Market, Industry, Entrepreneurship and SMEs

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Innovation Loans

Policy objectives Plus
4.1. Direct funding to business R&D and innovation
Presentation of the measure:

Innovation loans are a financial product offered by Innovate UK. They are for UK businesses that want to scale up and grow through innovation, developing new or improved products, processes or services. Through innovation loans, Innovate UK aims to give businesses support to gain the competitive edge and also boost the UK economy.

Loans may be offered where a business can demonstrate they are suitable and eligible.
They are for late-stage research and development (R&D) projects only that build on a new idea but have not yet reached the point of commercialisation. It may include activities such as prototyping, demonstrating, piloting, testing and validation in environments that are representative of real-life operating conditions.
Innovation loans are aimed at UK-based small or medium-sized enterprises (SMEs) that can show that they can afford the interest and repayments on the loan and that they cannot obtain finance from other sources such as banks and equity investors.

Innovate UK is running a pilot programme of loan competitions over 2 years to the end of 2019. A total of up to €58 million is available for business innovation projects.
Interest will be set for the term of all loans at the opening of each loan competition, using the discount rate for financial transactions set by HM Treasury in Public Expenditure Statistical Analyses. Currently, this is 3.7% per year.
Loans will be made by Innovate UK Loans Ltd, a wholly-owned subsidiary of Innovate UK.

The first successful participants of the loan scheme include:

  • CitiLogik: analysing how people move to identify and analyse demand activity
  • G-Volution: dual-fuel engines that are cheaper, cleaner and greener
  • Alert Technology: the world’s first portable asbestos detectors
  • Alcove: assistive Internet of Things-based technology for older adults
  • Catagen: catalyst emissions testing and simulation
  • Utonomy: smart gas grid control to increase biomethane injection capacity
  • 3-Sci: moisture monitoring system for corrosion under insulation
  • Lightfoot: connected car technology
Budget, source and type of funding
Currency: GBP (Pound sterling)
National public funds 50,000,000
Regional public funds
EU Structural Funds
Private funds
Form of funding provided
Subsidised loans (including interest allowances)
Policy learning
To what extent the measure can be considered as a success and worthy of policy learning?:
There has been a positive response by beneficiaries to the measure (e.g. over-subscribed in terms of requested versus available budget) but it is too early to judge results or impact
Evidence of outcomes based on evaluation and other evidence:

There are no evaluations available for this measure yet.

What are the most important “Do’s and Don’ts” that regional stakeholders should be aware of when launching a similar measure?:

The programme offers loans to growth-oriented SMEs through competitions to make sure that they are completely focused on innovation and growth. In addition to that, it also has a strong credit focus to make sure that loans are only being offered where they are suitable and where there is a real need for public support.

Would you recommend this measure as an example of regional good practice to policy-makers from other regions ?:
Organisation(s) responsible