Two years after plans were announced by George Osbourne, the first competition offering innovation loans was launched at the Innovation2017 event. This complements the other Innovate UK “products” such as grants and access to finance support.
The intent of the offering is summarised as: “affordable, flexible, patient”.
Up to £1M is available as a loan, to be drawn down over three years to cover up to 100% of costs associated with the first commercial deployment of an innovative (but technically de-risked) product or service.
Interest will be charged at 3.7% per annum, and the principal is repaid over several years starting within 2 years from the end of the project.
Repayment is mandatory, and is not dependent on the success (or otherwise) of the project. Security will be sought and is likely to include assets procured and IP developed using the loan.
Here’s how the scheme is intended to work:
- Standard competition process will be used with themed calls inviting bids from innovative companies.
- The loans will be provided to deliver single-company projects which take new products or services to market for the first time.
- Projects will last up to 3 years with quarterly draw-down in advance to cover 100% of eligible costs.
- Applicants can request loan facilities betweeen £100k and £1M.
- Once drawdown starts, interest will be charged on the amount borrowed at 3.7% per annum (this may vary).
- After the project is completed (and the product is hopefully generating revenue) the interest continues to be paid. Refund of the principal can be delayed for up to two years, and must be completely settled up to 5 years after that.
We can expect 5 themed competitions in the next 18 months or so, including one “Open” theme. First out of the blocks is the Infrastructure theme. This competition closes on 18th January 2018.