Scaleup funding for Advanced Manufacturing, Clean Energy, Creative Industries, Defence, Digital Technologies and Life Sciences.
Introduction
After significant underspend in 2025 and the last-minute cancellation of Round 26 a couple of months ago, the Innovate UK Innovation Loans is returning. Innovate UK Innovation Loans remains one of the UKs most significant sources of non-dilutive scaleup finance.
Innovation Loans offer between £100k and £5m in low-interest loan funding.
This programme is relevant for innovative products, processes or services – new business models are also eligible. The relaunch of the programme follows major changes to IUK, laid out in the Innovate UK 2026 Prospectus.
Below we give an overview of the changes and updates to the new IUK Innovation Loan programme from Q3 2026.
The new Expression of Interest Stage for IUK Innovation Loans
Applicants must now pass an Expression of Interest stage before submitting a full application. This change aims to reduce the number of ineligible applicants that skyrocketed since the closure of the IUK Smart Grants.
The new EOI stage acts as an early ‘screening’ process that qualifies applicants. This allows you to check eligibility and chances of success before putting weeks of work into writing the full application.
There is no limit on the number of EOIs you can submit, if invited to submit full applications then applicants’ capacity to take on multiple projects are assessed.
Read the full EOI competition overview here.
Increase focus on Industrial Strategy Sectors
Unsurprisingly, there has been a shift towards the six industry sectors which fits with the pattern across Innovate UK more broadly. Previous rounds operated under the ‘Future Economy’ concept, now all projects must focus on at least one of the following six Industrial Strategy Sectors:
- Advanced Manufacturing
- Clean Energy
- Creative Industries
- Defence
- Digital and Technologies
- Life Sciences
Please note that Financial Services, and Professional and Business Services sectors are explicitly not in scope for Innovation Loans.
Commercialisation-Focused Changes Introduced in 2025 Remain
The changes that were made from round 22 (July 2025) all still appear to be relevant. We have a full article on these changes, but to summarise them:
- Loan amount – remains at £100k – £5 million
- Eligible costs – you can still include a pre-commercial work package
- (labour, market testing, real world validation, initial tooling or production scale up, capital usage, and up to 20% working capital where it supports commercialisation)
- Loan structure – maximum term of loan is now seven years
- New financial template
What has stayed the same?
The things that have stayed the same is that the loans continue to focus on highly innovative late-stage R&D projects that show a clear route to commercialisation. They are for UK registered SMEs and must show economic benefit to the UK.
Rather than a replacement for a grant, Innovation Loans should be seen as it;s own finance instrument for innovation commercialisation.
Full UKRI Eligibility Guidance can be read here.
Final Reflections
The return of Innovate UK Innovation Loans is welcome news for UK SMEs seeking non-dilutive commercialisation finance. The extra EOI step is a natural response to broader changes in the UK grant funding landscape. While the core purpose remains the same, understanding the nuances and details of the expression of interest is key in order to be successful.
Strong applications should demonstrate credible demand, a clear route to market, realistic financial planning and a convincing case for wider UK economic impact. If you have any questions or would like support with your application, get in touch with us to see how we can help.
Oliver Cressall
I help businesses unlock grant funding to fuel groundbreaking research and innovation. With expertise in both UK and European grants including Innovate UK (IUK), Eureka, Horizon Europe, UKRI, CINEA, and the European Research Council – I specialise in guiding research teams and innovation-led businesses through every stage of the grant process.
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