Business Innovation Loans from Innovate UK – What have we learnt in 2018?

Introduction to Innovation Loans for Business by Innovate UK

Innovate UK (UKRI) ran 5 Innovation Loan Competitions in 2018 targeting Health & Life Science, Infrastructure Systems and Open Innovation (3 rounds). Granted Consultancy have supported clients through the application and project management process of the Innovation Loans for multiple projects over 2018 and here we share some of our insights and learnings.

Business Innovation Loan Application Process

Compared to Grant Funding Applications, the Innovation Loan Fund demands significantly more information and input from applicants. There are two sections to the application:

1. Part A – Follows an identical process as applying for a grant
a. 10 questions + 4 supporting appendices focused on the R&D project

2. Part B – Additional questions focused on the suitability of an applicant for loan funding
a. 8 questions + 4 supporting appendices focused on the business plan and finances

3. Financial Forecasts
a. Covering the period of the project and loan repayment

Innovation Loan Awarding Process – Innovation Assessment

The loan application for innovation is first assessed on Part A as per the usual grant appraisal process (assessed by 5 independent assessors and scored out of 100 with a threshold success score of 70%). Should the application meet the threshold, an email will be sent confirming that the first hurdle has been cleared.

Innovation Loan Awarding Process – Loan Suitability

There then follows a 6-8week process where the applicant company is assessed for its suitability to receive a loan. It is important to note that IUK Loans do not ask for Personal Guarantees or Fixed Assets to secure the loan against, so expect austerity at this stage.

This process will require:

1. A face to face meeting (90mins) with a presentation from the applicant and specific questions on the financial forecasts provided

2. Request for information from IUK Loans team to clarify the position on certain elements of Part B – including commercials, risks, project management, other funding options, scenario modelling and corporate governance

3. Further meeting (or conference call) to discuss the information provided and clarification of any further concerns from the IUK Loans team

4. The credit report will then be finalised (by IUK Loans team) and passed to the IUK Loans Committee for a final decision on whether to award the loan

5. Finally, a presentation to the IUK Loans Committee by the management team of the applicant will be arranged before the loan can be drawn down

Key Learnings about Innovation Loans for Business from Innovate UK in 2018

So, what have we learnt? Here are 5 things we have discovered in advising applicant businesses through successfully securing Innovate UK Innovation loans:

1. Timing – This Innovation Loan funding process is time-consuming from the perspective of a business operating in a dynamic commercial setting. Understand that the application will take 6-8weeks to prepare properly and the decision time frame is at least 12weeks.

2. Innovation – The first hurdle is the assessment of the innovation of the applicant. Loan assessment will not begin unless novelty and capability is demonstrated, so get this bit right or the rest of the effort will have been wasted.

3. Financial Forecasts – Get them prepared by an experienced FD who can generate 5year forecasts with financial ratios appropriate to a commercial loan. Consider Assets vs. Long-Term Liabilities and make sure this ratio is favourable from the perspective of a lender.

4. Scenario Modelling – Consider and model what would happen if sales were delayed, Quick Ratio lapses or key customers fall away. Demonstrate contingency plans and risk management to cope with adverse commercial scenarios.

5. Up-side – This loan has huge benefits – no PG, payment holiday, early drawdown, low-interest rates and a significant cash injection. Get the application right, treat the Due Diligence process with respect and secure the funding.

Granted Consultancy have experienced bid writers who demonstrate innovation and have FD-level financial forecasting capabilities to prepare professional models and an advanced project management team that understand the Due Diligence process. Give your business the best chance of securing Innovation Loans by getting in touch with our team today.

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