Government agency Innovate UK has launched a pilot scheme to provide scale-up loans to small and medium-sized enterprises aiming to bring novel concepts to market in four, specific technology fields.
Available during an initial pilot scheme in sums between £100,000 and £1m, the agency’s ‘innovation loans’ are ultimately designed to help eligible companies ramp up their activities and secure firm footholds in their sectors.
Loans will be offered to growth-oriented SMEs that are able to demonstrate they have high-quality innovation projects under way.
They will also be required to show that they can afford the interest payments, and repayments, associated with the loans – and that they need public-sector support, as they are unable to access finance for their projects on standard, commercial terms.
To further support the loans’ viability, Innovate UK will target them at later-stage R&D projects with a clear route to commercial success.
With a total funding pot of £10m up for grabs in the pilot phase, interested SMEs must be working on projects aligned with Innovate UK’s four priority areas:
1. Smart infrastructure Adding intelligence to improve physical infrastructure or the design process.
2. Urban living Addressing the everyday challenges that people face in urban areas, in order to improve end users’ experiences and lower costs. This field may cover technologies such as:
3. Energy supply and systems Improving the value proposition, affordability, emission rates and security of energy solutions.
4. Connected transport Solutions that move people and goods more efficiently and sustainably, while making transport more secure, user-centric and accessible.
This initiative marks the first time that Innovate UK has offered borrowers a funding mechanism other than matched grants.
Each innovation loan will allow its recipient up to three years for finalising product development; a further two years to commercialise and, finally, up to five years to repay – although the agency expects that, typically, terms will range between five and seven years.
Loans are priced at the standard, HM Treasury discount rate – currently, 3.7% fixed.
Innovate UK chief executive Dr Ruth McKernan CBE said: “We know that many businesses with groundbreaking 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.”