Following our previous blog post, further details of the Innovate UK loans have been announced and the competition, ‘round one’ is open. There is a briefing event taking place on 16 November which can be joined by webinar, and we will be tuning in…
As a reminder, innovation loans are aimed at businesses involved in late stage R&D projects where they cannot get finance, but can bring a commercial product to market:
- They are for late-stage research and development (R&D) projects only. A late-stage R&D project is one which builds on a new idea but has not yet reached the point of commercialisation.
- Interest will be charged at the rate of 3.7% per annum on outstanding amounts, payable quarterly in arrears. Note, State Aid rules apply as the rate offered is under market value.
- The ‘availability period’ (for up to 3 years) is when the project is under way, but the exploitation has not yet started. You can borrow in stages (‘drawdowns’) during this period and will pay interest on anything you borrow.
- The ‘extension period’ (for up to 2 years) is when the project is focused on developing the commercialisation of the product. You will not be able to make further drawdowns during this period.
- Repayable over a maximum of 5 years (the ‘repayment period’) after the availability and extension periods. You will have to repay on a regular quarterly schedule and you will pay interest on the outstanding amount of the loan.
- Typical security for a transaction of this nature may include, but is not limited to:
- A debenture over the borrower’s assets (including, and without limitation, a fixed charge over key assets and a floating charge over all other assets of the borrower)legal charge over intellectual property and specific assets financed under the loan agreement. PGs are not required.
- A legal charge over intellectual property and specific assets financed under the loan agreement. PGs are not required.
- Any applicant must be an SME, UK-based and the project must fit within the defined scope of the specific loan competition you are applying into. Joint applications are not permitted.
Key Dates for ‘round one’:
- 8 November 2017 – Competition opens
- 16 November 2017 – Briefing event for applicants in London or by webcast
- 10 January 2018 12:00pm – Registration closes
- 17 January 2018 12:00pm – Competition closes
- 3 April 2018 – Earliest project start date and start of drawdowns
- 27 April 2018 – Applicants notified
There are 4 specific themes for this innovation loan competition:
- Smart infrastructure
- Urban living
- Energy supply and systems
- Connected transport
Innovation loans will not be offered to:
- Businesses they consider unable to afford the interest and repayments on the loan.
- Businesses that have not demonstrated that they are unable to obtain finance from other sources on suitable terms.
- Innovations that are deemed too early for an innovation loan and require significant early stage R&D.
- Incremental innovations unlikely to significantly improve UK economic and SME growth.
- Connected transport innovations that can only be applied to propulsion and onboard systems in a single mode of transport (for example, only automotive, rail, air, or marine vehicles or vessels).
- Connected transport proposals for new physical infrastructure, unless they encourage change across complex transport systems.
- Fossil fuels, including exploration, appraisal, production, processing and transport.