If you’re a UK SME with late-stage R&D ambitions, Round 22 of Innovate UK’s Innovation Loans could be a good fit for your funding roadmap. Innovate UK have made some updates to the next round’s scope with larger loan amounts, expanded eligible costs, and extended project durations, this round introduces the most SME-friendly terms we’ve seen.
What’s new in Round 22 of Innovation Loans
Increased Loan Size : SMEs can now apply for up to £5 million per project, compared to the previous £2 million cap. The minimum remains £100,000.
Broader Eligible Costs and Pre-Commercial activities: There is now wider range of funding uses, including:
- Capital assets and tooling
- Go-to-market preparation
- Trials and early-stage inventory
- Up to 20% for working capital, a crucial boost for transitioning from R&D to market launch
Extended Timelines: Projects can now span up to 5 years, with a 7-year total loan lifecycle. This seems to be more suited to the commercial cycles common in sectors like AI, dep-tech, healthtech and sustainable innovation
Key Terms and Benefits for UK SMEs
Innovation Loans remain non-equity, requiring only a debenture over company assets – no personal guarantees or equity surrender.
The interest rates are relatively low at 3.7% during the R&D and availability period and 7.4% during the repayment phase. The interest-only stages help preserve cash flow during critical milestones, this structure is designed for IP-rich, growth-oriented businesses who need time before revenue generation.
Final Thoughts and Seizing the Opportunity
Round 22 of Innovate UK’s Innovation Loans is a major strategic shift designed to meet the real-world needs of innovative UK SMEs. Whether you’re scaling a deep-tech startup, commercialising digital health breakthroughs or working on net-zero technologies, these new updates are well suited to you.
With £5 million per project, extended repayment terms and support for both R&D and market entry, the new guidelines helps remove some of the historic roadblocks that prevent high-potential businesses from accessing capital.
Don’t miss the next deadline: 27th August 2025
Have any questions or want expert guidance? We can help you craft a high-impact application, navigate the entire process or just check if you are eligible. Get in touch to find out more!
FAQs
Apply through the Innovation Funding Service (IFS) portal by 27 August 2025. The application is made up of: a business plan, cash flow forecast, and repayment strategy.
Yes, under these new guidelines up to 20% of the total loan can be allocated to working capital – this can bridge your path to market entry.
Higher funding (up to £5M), broader eligible costs (including pre-commercial activities), longer project durations (up to 5 years), and better cash flow support.
UK-registered SMEs with late-stage R&D projects in areas like AI, sustainability, healthtech, or manufacturing. Strong financials and repayment capacity are essential. Get in touch if you want specific guidance.
There a a plethora of difference that depend a lot on the programmes in question. Putting it very simply: grants are non-repayable and (usually, not always) suited for early-stage R&D; loans are repayable but often support later-stage commercialisation with larger sums and more flexibility.
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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