Posted by Ewan McClymont on January 18, 2018
Innovate UK is the country’s innovation agency, sponsored by the Department for Business, Energy & Industrial Strategy (BEIS), to support business to realise the potential of new technologies, develop ideas and make them a commercial success.
It runs several grant and funding competitions, as well as national innovation programmes to build and grow successful businesses through innovation.
Launched in autumn 2017, the £50 million pilot Innovation Loans scheme aims to provide flexible finance for later-stage innovation projects that have a clear route to commercial success. They are aimed at SME businesses that are able to manage a loan, but struggle to access finance from commercial lenders or schemes backed by the British Business Bank.
Loans of between £100,000 and £1.0 million are made available in competitive funding rounds for later-stage innovation projects that clearly demonstrate they are working with end-user and problem owners. The first funding competition focused on four areas – smart infrastructure, urban living, energy supply and systems, and connected transport.
Projects should last up to 5 years, of which up to 3 years can focus on research and development (R&D), and up to a further 2 years on establishing a route to commercial success. Loan repayments will be required over a further period of up to 5 years. Interest is charged at a rate of 3.7% per annum, payable quarterly in arrears and whilst security is taken where it is available, the scheme does not require personal guarantees.
Loans could be available for up to 100% of eligible project costs and due to the favourable rate of interest, the value of the benefit over the life of the loan will be the equivalent of an experimental research grant for State Aid purposes. This will impact on the level of potential R&D Tax Credits that a business might also apply for, and you are therefore advised to seek professional tax advice before committing to a loan application. Bishop Fleming are specialists in this area – our Tax Advisory Service can be contacted on 03333-219000.
For further information on the Innovate UK Loan scheme and dates of the next competition, visit https://www.gov.uk/government/organisations/innovate-uk .