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UK Government backs innovative businesses with new £150m loan scheme

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UK Government backs innovative businesses with new £150m loan scheme

UK Government backs innovative businesses with new £150m loan scheme
March 16
10:33 2022
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Some of the UK’s most innovative businesses are set to benefit from a new series of loan competitions. The competitions will offer businesses up to £150 million to support their research and development projects, the UK government has announced.

The loans will support:

  • innovations deemed to have the strongest potential to support future economic growth and tackle social challenges, across fields such as:
    • net zero
    • health and wellbeing
    • next-generation digital technologies
  • the ‘seven technology families’ of the innovation strategy:
    • advanced materials and manufacturing
    • engineering biology
    • electronics
    • sensors
    • photonics and quantum
    • robotics
    • smart machines.

Funding over three years

The funding, to be delivered through Innovate UK, will be available to small and medium sized-enterprises (SMEs) over the next three years. It will prioritise projects focused on the most important areas of the future economy as set out in the Innovate UK plan for action.

Businesses can apply for funding through the Innovation Funding Service.

Building on the innovation strategy

The loans are part of the government’s plan to build on the measures outlined last year in its innovation strategy. The measures enable UK innovators to access the right finance at the right time in order to grow.

It builds on our world-leading research capability and helps to secure the UK’s position as a science superpower.

Supported projects

Projects supported via the successful loan programme have included:

  • portable freezers able to safely deliver vaccines to care homes and surgeries
  • a platform designed to protect hospitals and healthcare centres from cyber-attacks during the pandemic
  • patented hospital screens preventing the transmission of pathogens and viruses.

Businesses with innovative late-stage projects can apply for a loan between £100,000 and £2 million, with flexible repayment terms to help secure their future growth and commercial success.

Monthly competition rounds

The new full-scale programme will start with monthly competition rounds, for which applicants will need to demonstrate evidence of:

  • a high-quality proposed innovation project
  • suitability to take on a loan
  • inability to access finance for their project from commercial finance providers.

This government-backed finance builds on the success of:

  • an extended pilot programme that has been delivered by Innovate UK Loans Limited since 2017
  • the programme of innovation continuity loans delivered as part of Innovate UK’s coronavirus support package.

Driving productivity and growth

Innovation loans are designed to support suitable SMEs in carrying out late-stage research and development projects, with a clear route to commercial success to drive productivity and growth across the UK. The decision to transition from pilot to full-scale loans programme was taken following an independent evaluation of the scheme’s success.

The evaluation found that the pilot had been extremely effective. And that the innovation loans programme is viewed as a key finance product within the market, supplying essential funding that would not have been available elsewhere.

£163 million, 200 businesses

The innovation loans programmes to date have committed £163 million to around 200 businesses in all parts of the UK. It has enabled new product development and commercialisation activities, supporting investment in research jobs and delivering growing levels of sales.

Over a third of businesses in the portfolio have accessed additional private investment, leveraging new capital of over £110 million, with an average raise of £1.8 million.

Independent interim evaluation

An independent interim evaluation supported the decision to move forward from the pilot. Innovate UK commissioned SQW, working with IFF Research and Middlesex University, to conduct an interim evaluation of the pilot in 2019, with a follow-on report now also published.

This interim evaluation found the pilot to have been highly successful and reported that the innovation loans programme is viewed as a key finance product in the market.

It complements other finance products and provides beneficiaries with access to funding that would not be available elsewhere.

Supporting talented innovators

Science Minister George Freeman said: “As the success of our extraordinary vaccine development roll-out made clear, the UK is home to some of the most brilliant and innovative minds in the world.

“Supporting our talented innovators, not only to develop their ideas but to see these ideas through to commercialisation, will be essential to growing an economy built on the technologies of the future, and securing the UK’s status as a true innovation nation.

“So, I am thrilled that after an extremely successful pilot programme, Innovate UK are launching this substantial new series of loans to support SMEs working across the country on the most innovative projects for the future economy, entrenching our position as a science superpower.”

Helping businesses achieve their ambitions

Indro Mukerjee, CEO of Innovate UK, said: “Innovation loans are an important part of the investment support that Innovate UK offers to help UK businesses achieve their growth ambitions.

“We have tested this new form of support rigorously and I am pleased that we can now offer £150 million over the next three years through innovation loans as part of our commitment to support innovative businesses to grow rapidly and achieve scale.

“The innovation loans scheme is just one of the services to growing and scaling businesses across the UK.

“Our wrap-around support now includes greater access to Innovate UK EDGE, a business advisory service; and Innovate UK KTN, more opportunity for businesses to connect with potential academic and business partners to help scale in the UK and abroad.

“Allied with this is our continued work with the British Business Bank and private finance to provide further backing for UK innovators.”

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