To receive an innovation loan for a new project you must:

• be a UK registered micro, small or medium sized enterprise (SME)
• carry out your project from or in the UK
• intend to exploit the results from or in the UK
• give evidence that your business is suitable to take on a loan

We will evaluate whether your business is suitable to receive an offer of a loan for your project.

Individuals, large companies, not for profits, charities, academic institutions, and research organisations are not eligible for innovation loans.

Only single businesses can receive loans, so collaboration with other organisations cannot be funded in this competition.

There is no limit on the number of Expressions of Interest you may submit. If you are invited to submit full applications, we will assess your capacity to undertake multiple projects at the same time, including consideration of your existing financial commitments.

If you are successful in this Expression of Interest competition you will be invited to apply to the full stage competition where you can apply for a loan of between £100,000 and £5 million to fund your project.

Projects can last up to five years, including both the R&D and pre-commercialisation phases. Projects are expected to start from 1 December 2026. Your exact project start date and first innovation loan drawdown will depend on the timing of the final credit committee decision and completion of loan documentation.

Innovation Loans now allow you to include a pre-commercial work package within your project. This will allow you to include some of the new eligible costs that will help you to take your project innovation to market and are over and above typical R&D costs.

Eligible costs

New eligible costs that can be included in the pre-commercialisation work package include labour, market testing, real world validation, initial tooling or production scale up, capital usage, and up to 20% working capital where it supports commercialisation. Loans can cover up to 100% of eligible project costs.

Note: businesses subject to State Aid Regulations under the Windsor Framework, which includes companies registered in Northern Ireland, will not be able to claim all of the new costs outlined.

You must check the Windsor Framework to check if these rules apply to your organisation. If it does, you will be restricted to the capital usage and material costs for the pre-commercialisation work package.

Innovate UK will offer loans of between £100,000 and £5 million, based on your project proposal and our judgement of the suitability and affordability of a loan for your business. The Innovate UK Loans Ltd credit committee will decide the final terms, amount and length of the loan offer.

Innovation loans consist of two distinct phases: a project period of up to five years, and a repayment period of up to five years. The total loan term must not exceed seven years, so you must structure the duration of each phase accordingly. You must ensure there is sufficient time after the R&D and pre-commercialisation phases to reach the initial stage of full commercial exploitation.

The project period starts from the first loan drawdown and continues until the point of first commercial exploitation. This period typically includes the R&D activities (which should be completed within the first three years) and may also include a pre-commercialisation work package. You must allow time after the R&D and pre-commercialisation to begin full commercial exploitation.

Loan drawdowns are quarterly during the project period. Interest will be charged at 3.7% per annum on the drawn amounts. An additional 3.7% per annum in deferred interest will also accrue on the principal but will not be payable until the repayment period begins.

The repayment period begins immediately after the project period ends and can last for up to five years. During this time, you will be required to repay the full loan amount, including any deferred interest, on a quarterly basis. Interest will be charged at 7.4% per annum on the outstanding loan balance.

The overall term of the loan must not exceed seven years and you must structure the duration of the project period and the repayment periods accordingly. You must ensure you leave enough time from completion of the project and any pre-commercialisation activities to get to your first commercial sale.

These periods must be based on the needs of your business. We will consider the suitability of your proposed timings in any loan offer that we make to you.

By way of an example, if the project requires three years of research and development and pre-commercialisation activity to get to market, then the maximum time available for the loan repayment would be four years.

This is an Expression of Interest (EOI) for an Innovation Loan. If your EOI is approved, you will be invited to submit a full application.

Innovate UK innovation loans are for highly innovative late stage research and development (R&D) projects undertaking experimental development with the best potential for the future. There must be a clear route to commercialisation and economic impact.

Your project must lead to innovative 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.

Your project must demonstrate:

• a clearly expressed and compelling innovative idea
• a robust and deliverable business plan that addresses and shows evidence of market potential and needs
• a team with the necessary skills and experience to run and complete the project successfully and on time, and take the outputs forward
• awareness of all the main risks the project and business will face, with realistic plans to manage, mitigate and minimise the impact of each of these
• sound, practical financial plans and timelines that represent good value for money and ability to repay the loan
• why you are unable to fund the project from your own resources or other forms of public or private sector funding
• a clear, evidence based plan to deliver significant economic impact, return on investment (ROI) and growth through commercialisation, as soon as possible after project completion

Your project can include:

• prototyping
• demonstrating
• piloting
• testing
• validation

These can be in environments that represent real life operating conditions.

We encourage innovation involving communities that are typically under represented including:

• from regions that have historically accessed lower levels of investment (outside London, Oxford and Cambridge)
• ethnic minority groups
• women and other marginalised genders
• people with disabilities
• people with non-traditional education backgrounds

We particularly welcome applications from businesses from these communities.

Your application will be evaluated on:

• the quality of your project proposal
• the financial information you have submitted to us
• the suitability of your business to take on a loan

Your project must primarily focus on at least one of the following sectors within the UK Government’s Industrial Strategy:

• Advanced Manufacturing: Includes aerospace, advanced materials, agri-tech, automotive, batteries, and space industries
• Clean Energy Industries: Focuses on wind (onshore, offshore, and floating offshore), fusion energy, nuclear fission, hydrogen, carbon capture usage and storage (CCUS), and heat pumps
• Creative Industries: Encompasses advertising and marketing, film and TV, video games, music, performing and visual arts
• Digital and Technologies: Covers artificial intelligence, engineering biology, advanced connectivity technologies, quantum technologies, semiconductors, and cybersecurity
• Defence: Focuses on drones and autonomous systems, combat air, directed energy weapons, complex weapons, and maritime capabilities. Encompasses dual-use and civil-applicable innovations that strengthen the UK’s advanced engineering and security capabilities while maintaining export compliance and ethical standards
• Life Sciences: Includes pharmaceuticals and medical technologies (MedTech)

If you have any queries about Innovation Loans, contact Innovate UK Business Connect’s Loans team.