Notice

Innovation loans competition guidance: manufacturing and materials readiness

Published 20 February 2018

This notice was withdrawn on 21 May 2018

This competition is no longer open for applications. Search current funding opportunities.

1. Dates and deadlines

Competition opens	26 February 2018
Competition briefing events	5 March Manufacturing Technology Centre, Ansty 6 March BMA House, London (with webinar) 8 March Advanced Manufacturing Research Centre, Rotherham 9 March National Biologics Manufacturing Centre, Darlington 14 March Strathclyde Technology & Innovation Centre 15 March Sci-Tech, Daresbury 16 March The Engine Shed, Bristol 22 March NIACE Centre, Belfast
Final date for registration	Midday 25 April 2018
Submission of the full application (including part A, part B, finance form and appendices)	Midday 2 May 2018
Applicants informed if they will be considered for a loan	By 15 June 2018
Earliest project start date and drawdowns	October 2018

Please read the innovation loans guidance and full competition scope before you make your application.

2. Funding and outline loan terms

There is up to £10 million of loan funding available from Innovate UK in this competition. This is for research and development projects that tackle the technical challenges described in the brief for this competition.

Loans for eligible project costs must range in size from £100,000 to £1,000,000. We will offer loans based on your project proposal and our judgement of the suitability and affordability of a loan for your business.

Projects should last up to 5 years, of which up to 3 years (the availability period) can focus on research and development (R&D), and up to 2 more years (the extension period) to establish a clear route to commercial success. Loan repayments will be required over a further period of up to 5 years.

These are the longest periods we will consider. Your application should propose how long your project will last. We will consider the suitability of your proposed timings in any loan offer that we make to you.

Please read our funding rules guidance for more information on the different categories of funding and the rules around our state aid framework.

2.1 Summary heads of terms

Our summary heads of terms table provides an outline that reflects the typical nature of the loan agreement that Innovate UK Loans Ltd, the “Lender”, would consider making available. Innovate UK Loans Ltd is a wholly owned subsidiary of Innovate UK. The summary heads of terms are indicative and not exhaustive. The lender reserves the right to amend or withdraw these terms if required.

This is not an offer to provide finance.

Any loan agreement would be subject to due diligence and the documentation being in a form satisfactory to the lender:

Lender	Innovate UK Loans Ltd
Borrower	Eligible SMEs, being within the scope of the competition, as defined in the competition brief
Amount	£100,000 to £1 million. (Or up to 100% of eligible costs, subject to State Aid intensity thresholds, whichever is lower.)
Term	Up to 10 years, comprising: Stage 1: availability period of up to 3 years during which drawdowns will be permitted. Stage 2: extension period of up to 2 years during which no further drawdowns will be permitted. Stage 3: repayment period of up to 5 years.
Purpose	The loan is to be available to meet the eligible costs of a project that includes experimental development. This should be to develop and commercially exploit innovation within the scope defined in the competition brief.
Drawdown	Staged drawdowns, quarterly based on project milestones. Drawdowns will be subject to project progress, Monitoring Officer sign-off and financial and reporting covenants being met. The full amount will not be drawn at the outset.
Fees	No arrangement, commitment, non-utilisation, monitoring or security fees will usually apply.Where bespoke activities or arrangements are needed to complete a transaction, the lender reserves the right to pass on or share these costs, including the lender’s legal and valuation fees. This is subject to prior agreement with the borrower.
Interest	HM Treasury discount rate at the date the competition is launched. At the issue date of these summary heads of terms this is 3.7% per year. Fixed interest rate, subject to any restructuring or extension of the loan agreement. Quarterly interest payment dates. The first interest period will start on the first drawdown date and the final interest period will end on the termination date.
Repayment	The final repayment structure will be determined by the lender but could include: 1. Interest-only period of up to 5 years, consisting of the agreed availability period and extension period and 2. Repayment period of up to 5 years by way of quarterly repayments
Pre-conditions	The pre-conditions will include at least: 1. Evidence of the borrower’s status as an eligible SME 2. Delivery of the borrower’s business plan in a form that is satisfactory to the lender 3. Delivery to the lender of the borrower’s corporate authorisations that approve the borrower’s entry into the loan agreement and associated documentation, and approve a specified authorised signatory to sign for and on behalf of the borrower 4. Delivery to the lender of all relevant insurance documents 5. Delivery to the lender of all relevant financial and tax information
Security	Typical security for a transaction of this nature may include, but is not limited to: 1. 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) 2. A legal charge over intellectual property and specific assets financed under the loan agreement Where other funders are involved in a package deal, or future commercial investment is subject to securing priority, intercreditor arrangements may be required. In this event priority over assets not specifically scheduled in support of the innovation loan will not be unreasonably withheld. The lender will not take personal guarantees or security over principal private residences or benefit from the future sale thereof in the event of a realisation.
Loan covenants	The covenants set on each loan will depend on the structure of the transaction and the nature of the project. It is important to note that these covenants will consider the overall viability of the business of the borrower. They will be relevant to the proper management of public funds, but should not prevent the borrower from delivering their planned activity. The lender expects the project to meet its scheduled delivery timetable with the support of the Monitoring Officer. For example, covenants will include, at least, the following: Affirmative covenants Maintaining financial records and management information. Compliance with UK tax obligations. Maintenance of adequate insurance, including specific insurance in connection with the assets of the borrower and ‘key person’ cover in case of the loss of an important member of the business. Negative covenants Control of “cash out”, dividends and/or withdrawal of directors’ loans. Right of approval on change of control or business sale. Requirement to maintain prescribed debt service cover, liquidity, leverage and/or current assets ratios. Reporting covenants Annual accounts: audited as appropriate and as filed at Companies House and/or draft annual accounts, accountant-certified forecasts, regular management information, tax returns and bank statements. Where the delivery of the project, its subsequent commercialisation and the overall viability of the business relies on the quality of the project, the business leadership team and the individuals within it, the lender may require ‘key person’ clauses in addition to the items above.
Events of default	The events of default will depend on the structure of the transaction and the nature of the project. The events of default will be market standard and will include at least the following: 1. Change of control of the borrower without the lender’s prior written consent, which will not be unreasonably withheld. 2. The departure of a ‘key person’ from the business or the project without the lender’s prior agreement to the proposed and timely remedy, which will not be unreasonably withheld. 3. Non-payment on repayment date. 4. The borrower’s failure to comply with its obligations under the loan agreement. 5. Insolvency of the borrower. 6. Cross-default. 7. It is or becomes unlawful for any party to perform its obligations under the loan agreement. If the borrower defaults on its loan commitments, the lender will take steps to recover the debt in line with standard commercial practice.
Transferability and disclosure	The lender may freely transfer its rights under the loan agreement. The lender may disclose information applicable to such a transfer. The borrower shall reasonably assist with the provision of such information. The borrower may not assign or transfer its rights under the loan agreement.
Governing law	English
Documentation	The lender’s standard form loan agreement and security documentation will be used to document the transaction.

3. Declaration

Entering into a loan agreement with us is a significant financial commitment. In applying, you will be required to confirm that you:

• have made your own assessment in relation to the suitability of the loan agreement for your business
• consent to all searches necessary to determine the financial status of your business and other relevant checks appropriate to assessing creditworthiness
• understand that as part of our due diligence key persons, directors, beneficial owners and any relevant related persons may be required to consent to credit reference checks
• understand that information provided by you in the application will form part of the loan agreement. Information later proven to be false or misleading may lead to a breach of the loan agreement which could result in the immediate withdrawal of the loan, a demand for immediate repayment and the enforcement of any security granted in connection with the loan agreement
• acknowledge that the execution of the loan agreement and all associated documents must be by an authorised signatory of the company and evidence of such authorisation must be provided in the form of a board resolution
• acknowledge that upon entry into a loan agreement with us you will incur binding legal obligations and should seek independent legal advice
• are applying to enter into a loan agreement wholly or predominantly for the purposes of a business carried on by you or intended to be carried on by you
• understand you will not have the benefit of the protection and remedies that would be available to you under the Financial Services and Markets Act 2000 or under the Consumer Credit Act 1974 if this agreement were a regulated agreement under those acts
• are aware that if you are in any doubt as to the consequences of the agreement not being regulated by the Financial Services and Markets Act 2000 or the Consumer Credit Act 1974, then you should seek independent legal advice

4. Requirements and eligibility

Application:

• in your application form, select the primary type of research that you will be doing in the project and indicate the amount of loan you propose. This should be in line with the Innovate UK funding rules
• submissions using the incorrect application forms will not be considered eligible
• submissions without complete or missing finance forms or a business financials template will not be considered eligible
• all documents must be submitted in the correct file format as explained in this document; any document in an incorrect format will result in the entire application not being sent for assessment
• if you have been awarded grants previously as the lead or sole company, no new awards will be made if we feel that you have not made a substantial effort to exploit these previous grants. This is detailed in the exploitation plan submitted in the applications for the previous grants. The decision will meet the following criteria:
  • it will be decided by the sector team concerned using evidence from Monitoring Officer reports and other sources which will be documented
  • it will be made by at least 3 sector team members collectively
  • it will be communicated in writing to the company by the Innovation Lead dealing with the new grant application
  • it will not be contestable and Innovate UK will not enter into subsequent correspondence

Project:

• all projects must be undertaken by a UK SME
• projects must be from a single applicant
• only UK based companies are eligible to receive an innovation loan from Innovate UK

5. Competition process

For this competition, Innovate UK will use a portfolio approach. This is to make sure that the strategic criteria described in the competition brief are met for all projects considered to be above the quality threshold, and also to make sure that the portfolio of loans has a suitable credit quality. We will select the businesses to offer loans to, and the terms of those loans, building a portfolio that:

• has high quality projects
• spans a range of businesses that are of suitable credit quality
• spans the range of themes in the scope for the competition set out in the competition brief
• represents the potential for return on investment for both the business and the UK

Subject to meeting the innovation and credit quality thresholds, we reserve the right to manage the portfolio to achieve the correct balance of projects and funding.

Applications will have 2 parts, covering the quality of the project and the suitability of the business to receive a loan. Part A of the application will enable us to assess how innovative the project is, using external, independent experts. Part B will focus on the whole business and how suitable that business is for this loan opportunity.

Part A will be used for both the innovation and credit assessment. Part B will only be used by those involved in the credit assessment. This section will not affect the innovation score and will not be viewed by the assessors.

We will evaluate the suitability of your business to receive an offer of a loan for your project. Only businesses that are successful in both parts of the application will be offered an innovation loan. The final terms of any loan offer will be decided by the Innovate UK Loans Ltd credit committee.

The process will follow these steps:

Step 1: eligibility and scope:

• submitted applications will be reviewed to make sure that they are both eligible and in scope for the competition
• only applications that meet the eligibility and scope requirements of the competition will be sent for assessment

Step 2: innovation quality assessment:

• part A, including the part A project finance form, of applications in scope will be assessed by up to 5 external assessors who are experts in the innovation area identified in your application
• assessors will score part A of applications consistently and in line with scoring matrices. They will provide written feedback for each marked question
• all eligible and in scope applications for the competition will receive assessor feedback on part A of the application
• applications will be ranked in descending order. Applications which score over a quality threshold are then reviewed by our credit team

Step 3: credit evaluation:

• our credit team will review parts A and B of applications
• the credit team will consider whether propositions appear:
  • suitable: the business does not have accumulated losses that exceed 50% of their share capital if they are over 3 years old
  • affordable: interest cover (in the drawdown and extension periods) and debt service cover (in the repayment period) should meet acceptable ranges
  • appropriate for debt finance: being close to market and achievable within the constraints of innovation loans and, if part of a wider project cost, the availability of capital to fund the project overall
  • supported by a credible management team: for example, whether the business benefits from professional financial advice and in-house commercial expertise or plans to secure these in the project period, alongside the technical skills to deliver the project to market
• you will be informed if we need further information
• you will be given unique access to a secure file sharing site (co-ordinated by the lending operations team)
• the credit team will detail any additional information needed to complete the full credit assessment. We will try not to make multiple requests over an extended period of time. Applicants will also be asked for specific consents for credit reference agency checks to cover:
  • the financial standing of the applicant business and
  • the financial standing of key persons, including beneficial owners with a shareholding greater than 20%
• we expect to invite the management teams of businesses to make a presentation to our credit committee as part of our decision-making process

Step 4: Funding offer

• only businesses that are successful in both parts of the application will be offered an innovation loan
• the final terms of any loan offer will be decided by the Innovate UK Loans Ltd credit committee and may not be the same as those proposed in the application

6. How to apply

Before you apply into an Innovate UK competition, it is important to understand the whole application process for innovation loans. The information contained in this guidance is specific to this competition. In addition, please read our innovation loans guidance to give you further information that will help you to complete your application.

Register: You will receive an email acknowledgement of your registration followed by a second email up to 48 hours later. The second email will contain a username and password for our secure upload facility along with a unique Part A application number and form.

Application: Once you have received your unique username and password, you can sign in to the secure website. You are then able to access the following documents from the public download area:

• finance form for this competition. Only finance forms named ’Innovation loan project Finance Form.xls’ will be accepted into this competition. Previous versions of the project finance form will be ineligible
• part B application form template
• business financials spreadsheet

Submit your documents: You should submit to your FTP site:

• part A application form with your unique application number for this competition (mandatory)
• appendices to accompany Part A as PDF documents, labelled correctly according to the appendices guidance in section 10
• innovation loans part A project finance form for your project (mandatory)
• part B application form (mandatory)
• appendices to accompany part B as PDF documents, labelled correctly according to the appendices guidance in section 10
• business financials spreadsheet (mandatory)

Scope check: Only applications that meet the eligibility criteria and scope of the competition will be sent for assessment. You will be notified if your application is out of scope with a full explanation as to why. Innovate UK reserves the right to declare applications as out of scope.

Assessment: Once the scope and eligibility checks have been completed, part A of all applications that are both eligible and in scope are sent for assessment.

Credit evaluation: Those applications which score above a quality threshold will be reviewed by our credit team to identify whether the business is suitable to receive an innovation loan.

Notification: We will notify you of the outcome of the application by the date stated in the timeline, using the email address provided in the application form. If we wish to make you an offer of a loan, this will include the key terms and conditions of any such loan.

Feedback: Approximately 4 weeks after you have received your notification email, we will give feedback on part A of the application to all applications that have been assessed. You can access and download the feedback by signing in to the secure FTP site where you uploaded your application documents. No additional feedback can be provided and there will be no further discussion on the application.

7. The application form

This section explains the structure of the application form and offers guidance on what to answer in each question.

Part A of the application will enable us to assess how innovative the project is, using external, independent experts. Part B will focus on the whole business and how suitable that business is for this loan opportunity.

Part A will be used for both the innovation and credit assessment. Part A includes important declarations and confirmations which you must complete in order to be eligible for a loan.

Part A has 3 sections:

A1. project details

• application details
• summary of proposed project
• public description of the project
• gateway question: scope

A2. innovation questions

• question A1: need or challenge
• question A2: approach and innovation
• question A3: team and resources
• question A4: market awareness
• question A5: outcomes and route to market
• question A6: wider impacts
• question A7: project management
• question A8: risks
• question A9: added value
• question A10: costs and value for money

A3. project finances

• other funding from public sector bodies
• finance summary table

Part B will be used for the assessment by our credit team of the suitability of the business to receive an innovation loan.

Part B has 2 sections:

B1. business questions

• question B1: preferred loan conditions
• question B2: business management team
• question B3: business ownership structure
• question B4: business plan
• question B5: business risks
• question B6: private finance
• question B7: business financials

B2. business finances

• business details
• cashflow forecast
• historic and forecast balance sheets
• historic and forecast profit and loss accounts

Please make sure that you upload the final version of your application by the deadline. It is your responsibility to ensure that you do not upload a blank or incomplete application form. You should also follow these rules:

• you can only use the application form provided. It contains specific information including a unique reference number for your project
• the application form contains specific fields. It is important that you complete each field and submit a fully completed form. Incomplete forms will be considered ineligible and will not be sent for assessment
• the application form must not be altered, converted or saved as a different version of Microsoft Word
• the space provided in each field of the form is fixed. You must restrict your responses in each of the fields to the space provided. The typeface, font size and colour are predetermined and cannot be changed. Illustrations, graphics and hyperlinks cannot be included in the application form.
• the light grey shaded fields are completed automatically from other information entered on the form, such as the total columns of a table. These cannot be overwritten
• you should be able to see your total answer to the question when looking at the application form in print view. Any text that cannot be seen in this view or when the form is printed will not be assessed
• your answer to the questions should be no longer than half a page of A4 using the font Calibri 11

As part of our objective to stimulate and support UK innovation, we have established a close network of Affinity Partners. This list is made up of organisations that can help Innovate UK fund and support innovative businesses. Our joint aim is to speed up sustainable economic growth for the UK.

In some cases, we may share the public description of your project with other potential funding bodies, for example Local Enterprise Partnerships (LEPs), agencies of Scotland, Wales and Northern Ireland. These bodies may wish to contact you about providing funding or other support for your proposal.

We will share all application data and information with independent consultants. These will be appointed by Innovate UK to carry out interim and final evaluations of the innovation loans pilot programme.

8. Application form: part A

8.1 Project Details

Field	Guidance
Competition name	This field will show the full name of the Innovate UK competition to which the form applies. You do not need to enter anything here.
Document ID	This field is completed automatically.
Applicant number	This field is completed automatically and is the reference that you should use on all correspondence (this is the 6 digit number after the dash).
Application details
Project title	Enter the full title of the project.
Theme	Please select from the drop down list.
Research category	You must be doing experimental development to be eligible for an innovation loan.
Project timescales	Enter the estimated start date and its planned duration. These are indicative at this stage and are not guaranteed.
Organisation name	Enter the full registered name of your organisation.
Organisation contact details	Enter the full name, postcode, email address and telephone number of the main point of contact between Innovate UK and the project.

8.2 Loan application declaration

Guidance

In this competition, we will only make loans available to suitable SMEs for the business purposes set out in the competition brief. Entering into a loan agreement with us is a significant financial commitment so you should seek independent legal advice.

We require all applicants to confirm that they: * are eligible applicants * have made their own assessment that a loan is suitable * understand the nature and terms of the financial commitment involved and the consequences of entering into a loan agreement

Your agreement is needed to pass on information to other government agencies and our Affinity Partners as well as to the independent consultants appointed to carry out an evaluation of this programme.

We will only consider applications from organisations that have completed this declaration. The declarations will be repeated at the time any loan agreement is entered into.

8.3 Business overview (not scored)

Guidance

Briefly describe your business, and its current position in the market place. Describe the company vision for future growth and how you plan to achieve this.

This overview of your business is not scored, but provides an introduction to your business for the benefit of Innovate UK staff and assessors only. It will not be used for any public dissemination.

It should be written in plain English and cover the information you would give in an ‘elevator pitch’, describing:

• when your business was founded and by whom
• your recent turnover
• the level of profitability that you have achieved
• the number of staff in your business
• the location and nature of your main customers
• a summary description of the products and services that you offer

8.4 Summary of proposed project (not scored)

Guidance

Please provide a short summary of the content and objectives of the project including what is innovative about it.

This summary is not scored, but provides an introduction to your proposal for the benefit of Innovate UK staff and assessors only. It will not be used for any public dissemination.

It should be written in plain English and cover, in brief:

• the business need, technological challenge or market opportunity to be targeted
• the approach to be taken and how this will improve on the current state-of-the-art technology
• the difference the project will make to the competitiveness and productivity of your business

• how the project covers:

  • the availability period, when you will be carrying out experimental development R&D activities and drawing down on the loan
  • the extension period, when you will be working towards commercialisation of your innovation

8.5 Public description of the project (not scored)

Guidance

To comply with government practice on openness and transparency of publicly funded activities, Innovate UK has to publish information relating to funded projects. Please provide a short description of your proposal in a way that will be understandable to the general public. Do not include any commercially confidential information, for example intellectual property or patent details.

Describe your project. Funding will not be provided to successful projects without this.

8.6 Gateway question: scope

Guidance

How does this application align with the specific competition scope?

• all applications must align with the specific competition scope criteria as described in the relevant competition brief
• to demonstrate alignment, you need to show that a clear majority of the project’s objectives and activities are aligned with the specific competition

8.7 Part A competition questions

All questions apply to all project partners and are scored out of 10 marks. These questions relate to your entire project. They include activities in the availability period, when you will be carrying out experimental development R&D activities and drawing down on the loan; and the extension period, when you will be working towards commercialisation of your innovation. The Business Model Canvas may help you to consider and explain how your project will enable you to deliver your value proposition to customers.

Question A1: need or challenge

What is the business need, technological challenge or market opportunity behind your innovation? Describe:

• the main motivation for the project; the business need, technological challenge or market opportunity
• the nearest current state-of-the-art (including those near-market/in development) and its limitations
• any work you have already done to respond to this need. For example, is the project focused on developing an existing capability or building a new one?
• the wider economic, social, environmental, cultural and/or political challenges which are influential in creating the opportunity (for example, incoming regulations). Our Horizons tool can help here.

Question A2: Approach and innovation

What approach will you take and where will the focus of the innovation be? Explain:

• how you propose to address the need, challenge or opportunity identified
• how it will improve on the nearest current state-of-the-art identified
• whether the focus of the innovation in the project will be in the application of existing technologies in new areas, the development of new technologies for existing areas or a totally disruptive approach
• the freedom you have to operate
• how this project fits with your current product, service lines and offerings
• how it will make you more competitive
• the nature of the outputs you expect from the project, such as report, demonstrator, know-how, new process, product or service design, and how these will take you closer to targeting the need, challenge or opportunity identified
• the current level of readiness, how it is likely to change over the life of the project and how it is likely to lead to project success, using one or all of the following readiness level scales as appropriate:
  • technology readiness level (TRL), based on relevant application or adaptation of definitions of the maturity and capabilities of technology originally developed by NASA for the space industry, but also used in other technology sectors.
  • manufacturing readiness level (MRL), based on relevant application or adaptation of definitions of the maturity of a technology from a manufacturing perspective used by organisations such as the US Department of Defense or the Automotive Council in the UK.
  • commercial readiness level (CRL), based on relevant application or adaptation of definitions of the commercial maturity of a new product or service used by organisations such as the US Advanced Research Projects Agency.

In a separate appendix named ‘AppendixQA2-(application number)’ you can submit in PDF format up to 2 pages to provide a graphic, diagram or image to explain the technology, product or service innovation.

Question A3: Team and resources

Who is in the project team and what are their roles? Describe:

• the roles, skills and relevant experience of all members of the project team in relation to the approach you will be taking
• the resources, equipment and facilities required for the project and how you will access them
• any vital external parties, including sub-contractors, who you will need to work with to successfully carry out the project
• any gaps in the team that will need to be filled
• the resources that are available to take the project to market after the initial development period, which might include commercial officers and/or sales people, as well as marketers

In a separate appendix named ’AppendixQA3-(application number)’ you can submit in PDF format up to 4 pages to describe the skills and experience of the main people who will be working on the project.

Question A4: Market awareness

What does the market you are targeting look like? Describe:

• the markets (domestic and/or international) you will be targeting in the project and any other potential markets

• for the target markets:

  • the size of the addressable market or markets for the project outcome or outcomes, backed up by appropriate references where available
  • the structure and dynamics of the market (such as customer segmentation), market regulation, together with predicted growth rates within clear timeframes
  • the main supply or value chains and business models in operation, and any barriers to entry
  • the current UK position in addressing this market

• for highly innovative projects, where the market may be undeveloped:

  • what its size might be
  • how the project will seek to exploit the market potential
  • what makes it a suitable market
• for other markets, the size and main features

Question A5: Outcomes and route to market

How do you propose to grow your business and increase your productivity into the long term as a result of the project? Describe:

• your current position in the market or markets and supply or value chains outlined, and tell us whether you will be extending or establishing your market position
• your target customers and/or end users, and the value proposition to them, explaining why they would use or buy the product or service
• your route to market
• how you are going to profit from the innovation, through increased revenues or cost reduction
• the approach you will take to commercialise the outputs from the project
• how the innovation will impact your productivity and growth in the short and long-term
• how you will protect and exploit the outputs of the project, for example through know-how, patenting, designs or changes to your business model
• your strategy for addressing the other markets identified during or after the project
• how you expect to use the results generated from the project in further research activities, if appropriate

Question A6: Wider impacts

What impact might this project have outside your business? Identify, and where possible measure or quantify:

• the economic benefits from the project to those outside the project (for example, customers, others in the supply chain, broader industry and the UK economy) such as productivity increases and import substitution

• any expected social impacts, either positive or negative on, for example:

  • quality of life
  • social inclusion or exclusion
  • jobs, including safeguarding, creating, changing or displacing them
  • education
  • public empowerment
  • health and safety
  • regulations
  • diversity
  • government priorities
• any expected environmental impacts, either positive or negative
• any expected regional impacts of the project
• local, regional, national and global impacts

Question A7: Project management

How will you manage the project effectively? Outline:

• the main work packages of the project, indicating the relevant research category and the total cost of each one
• how the project relates to each stage of the innovation loan and how it will be managed, including the availability period (when expenditure on R&D will occur and the loan will be drawn down), the extension period (when the commercialisation will occur, but no further loan drawdowns will be permitted) and the repayment period (when the loan will be repaid)
• your approach to project management, identifying any key tools and mechanisms that will be used to ensure a successful project outcome
• your approach to managing the most innovative aspects of the project
• your project’s management reporting lines
• your project plan in sufficient detail to identify any links or dependencies between work packages or milestones

In a separate appendix named ’AppendixQA7-(application number)’ you can submit a project plan/Gantt chart up to 2 A4 pages in length in PDF format.

Question A8: Project risks

What are the main risks for this project? Identify and explain:

• the main risks and uncertainties of the project, including the technical, commercial, intellectual property, managerial, stakeholder communication, health, safety and environmental risks, highlighting the most significant ones and providing a risk register if appropriate
• how these risks will be mitigated
• any project inputs on the critical path to completion, such as resources, expertise or data sets
• whether the output is likely to be subject to regulatory requirements, certification, ethical issues and so on, and how you will manage this

In a separate appendix named ’AppendixQA8-(application number)’ you can submit a risk register of up to 2 A4 pages in length in PDF format.

Question A9: Added value

Describe the impact that an innovation loan would have on this project. Tell us:

• whether this project could go ahead in any form without the innovation loan and, if so, the difference the loan would make, such as creating a faster route to market or reducing risk
• the likely impact of the project on your business
• why you are not able to fund the project from your own resources or other forms of private-sector funding, and what would happen if the application is unsuccessful
• how this project would change the nature of R&D activity you would undertake, and related spend

Question A10: Costs and value for money

How much will the project cost and how does it represent value for money for your business and the taxpayer? Justify:

• the total project cost and the loan amount being requested in terms of the goals of the project and your business
• any sub-contractor costs and why they are critical to the project

Explain how this project:

• represents value for money for you and the taxpayer.
• compares to what you would spend your money on otherwise

Other funding from public sector bodies

If you have included one or more entries in column 7 of the finance summary table (on the following page), please provide:

• the names of the bodies
• the name of the programme or scheme from which the funds are provided
• the fund amounts

Project finance summary

This table lists the total project costs by organisation. Please include all costs that relate directly to your project (including both the availability and extension periods of the loan) and show how these will be funded through the loan and through other sources, including your own funds.

Please note that only certain project costs are eligible for funding under state aid rules, including through an innovation loan. See our project costs guidance for information on eligible project costs and how to complete the project finance form.

Where your project includes costs that are eligible for funding through an innovation loan and costs that are ineligible, these should be shown separately in the project finance form, together with the source of funding for each category.

Column 1 Organisation name	Provide the full name of the lead organisation as noted in Companies House.
Column 2 Organisation registration number	Provide your organisation’s company registration number as noted in Companies House.
Column 3 Enterprise category	Select your enterprise category. SME definition is based on the EU definition. Medium sized: headcount less than 250, turnover less than 50 million euros or balance sheet total less than 43 million euros Small: headcount less than 50, turnover less than 10 million euros or balance sheet total less than 10 million euros Micro: headcount less than 10, turnover less than 2 million euros or balance sheet total less than 2 million euros Please note the category you fall into may require you to take into account ownership interests from other organisations.
Column 4 Postcode where majority of work will be done	Provide the postcode where the majority of work will take place.
Column 5 Contribution to eligible costs by your organisation (£)	If the eligible costs of your project will be funded by additional sources, either external or internal, alongside the loan, list the total contribution. An example of this may be costs in excess of the maximum loan amount.
Column 6 Loan amount sought from Innovate UK	Enter the loan amount sought from Innovate UK for this competition.
Column 7 Organisation ineligible project costs	If your project includes costs that are not eligible for loan funding, enter the amount here. An example of this may be costs you will incur on the project during the Extension period.
Column 8 Other funding from public sector bodies	Include any funding applied for separately for the project from any other public sector bodies and not as part of this competition. Funding from other public sector bodies might include other applications to research councils, other government departments, devolved administrations, other public sector organisations and some charities. The purpose of this column is to provide Innovate UK with information on the total public funding for the project.
Column 9 Total (£)	The total cost of the project. This is the sum of columns 5, 6, 7 and 8 and will be entered automatically.
Bottom Row Total (£)	The total of each column will be entered automatically.

Please ensure that you click out of each cell after entering your figures.

Part A project finance form

You must provide a project finance form using the template ‘Innovation loan part A project finance form’, which is available on the FTP site. This must be submitted in Excel format with the application form by the applicant. The part A project finance form provides a detailed breakdown on your organisation’s total project costs. Please ensure that all total figures listed in your eligible project costs summary table and your ineligible project costs summary match those stated in the ‘Form status’ tab within the project finance form. This form will be included with the application part A that is sent to assessors.

9. Application form: part B

9.1 Business questions

Question B1: Preferred loan conditions

This will form part of the later discussion with Innovate UK and may be different to the terms you are offered. Please highlight your preferred loan conditions and how these form part of the project and business requirements, taking into consideration how long it will take you to carry out your R&D activities, reach commercialisation and repay your loan. Identify and justify:

• the loan amount
• the availability period of the project (up to 3 years when expenditure on R&D will occur and the loan will be drawn down)
• the extension period of the project (up to 2 years when the commercialisation will occur, but no further loan drawdowns will be permitted)
• the repayment period after completion of the project in the availability and extension periods (up to 5 years when quarterly repayments of the loan will be required)

You may show the availability, extension and repayment periods in months, quarters or years. The loan conditions must match the information input to the “Business Details” tab of the Business Financials spreadsheet, which need to show these periods in months. They must also match the inputs to the “state aid template” and “cashflow forecasts” tabs of the Business Financials spreadsheet, which need to show these periods in quarters. The availability and extension periods must also match the information included in your project plan in Part A of your application.

Question B2: Business management team

Who is the management team, what experience do they have and what is the management structure? Describe:

• the roles, skills and relevant experience of all members of the management team and any aspects of the project (including both R&D and commercialisation) they will work on
• the organisation structure of at least the top level management team
• the experience of each individual
• the overall level of commitment from the management team to this projectin both the R&D and commercialisation phases.
• who will be responsible for the project and how much time they are likely to spend on it

In a separate appendix named ’AppendixQB2-(application number)’ you can submit a single appendix as a PDF no more than 20 pages in length to support your answer.

Question B3: Business ownership structure

Who owns the company? Provide:

• outline information on the ownership structure of the company
• detailed information on beneficial owners that own 20% or more of the business. This information must match your inputs to the “Business Details” tab of the ‘Business Financials Template’

In a separate appendix named ’AppendixQB3-(application number)’ you can submit a single appendix no more than 2 pages in length to support your answer.

Question B4: Business plan

What is your current business plan and how will it be impacted by this project? Describe:

• your business model, showing how you create, deliver and capture value, and how this might change with the success of this project
• your approach to managing the most innovative aspects of the business
• how this project could impact the business through success or failure
• any other products, processes or services that have previously been brought to market in the last 3 years
• key equipment and staff that are crucial to deliver the business model
• the financial situation of the business
• how the business aims to attract and retain customers

In a separate appendix named ’AppendixQB4-(application number)’ you can submit a business plan as an appendix in PDF format no more than 20 pages in length to support your answer.

Question B5: Business risks

What are the main risks for the business? Project risks have been covered in part A of this application form. This section should be used to highlight the risks which could affect the overall business. Identify and explain:

• the main risks and uncertainties, including the technical, commercial, financial, regulatory, managerial and environmental risks for the business.
• how these risks will be mitigated
• what significant milestones and associated risks that the business faces across the expected duration of the loan

In a separate appendix named ’AppendixQB5-(application number)’ you can submit a business risk register as an appendix in PDF format no more than 2 pages in length to support your answer.

Question B6: Private finance

Describe why public funding is necessary for this project. Have you considered or approached other forms of commercial finance?

Explain in detail why you are not able to fund the project from your own resources or other forms of private-sector funding such as equity investment, commercial lending or lending supported by the British Business Bank and other regional, national or international agencies.

Question B7: Business financials

What is the financial situation for the business? Explain:

• how you are going to repay the loan and cover the costs of the interest
• how you are going to fund any additional project costs which are not covered by this loan
• what future financial commitments the business will have and how these will be managed alongside the loan

You should provide a schedule of liabilities (including any director loans or shareholder loans)

Innovate UK is not permitted under state aid regulations to provide financial support to any business in difficulty. Therefore, before we complete a full credit assessment, we will check to ensure that applicants do not have accumulated losses that exceed 50% of their share capital. The only exception this will be if they are SMEs under 3 years old or can otherwise demonstrate that they can properly be considered to be a going concern.

Using the Excel spreadsheet ‘Business Financials Form’, please provide financial information to enable us to make a full credit evaluation of your business. You may use the templates provided, but if you prefer not to, then you must ensure that the information you provide is copied to the relevant pages in this spreadsheet and is complete. All of this information is required to proceed.

9.2 Business financials spreadsheet

We require information on the historic and prospective financial situation of your business. You should provide:

• the past 3 years’ full financial accounts, including a balance sheet and a profit and loss account. For businesses that are less than 3 years old please provide all available years of financial accounts. This information should be input to the Balance sheet and Profit and Loss Accounts tabs in the Business Financials spreadsheet.
• forecast cash flows, profit and loss accounts and balance sheets for the full duration of the preferred loan conditions, considering both project success and failure. This information should be input to the Cashflow Forecast, Profit and Loss Forecast and Balance Sheet Forecast tabs in the Business Financials spreadsheet.

Guidance: Business financials workbook

This workbook is made up of 7 worksheets. All pages need to be completed and this workbook re-uploaded to the FTP site before your application is submitted. An incomplete workbook will result in an ineligible application.

The following is an outline of what is included on each page. Each page has its own instructions on what needs to be completed. If you wish to not use the templates provided, please ensure the information you provide is copied to the relevant pages.

Business details

This page has 5 sections. This provides some of the important information that will feed into the other parts of your application. Please ensure all sections are completed and that all inputs match to information provided in other parts of your application.

State aid template

This worksheet enables you to test different loan conditions to identify the amount and timing of expected repayment and interest. The final saved version you submit should contain the desired loan conditions identified in the Business Details section and Question B1 from your application form. The output of this sheet will also provide you with amounts and timings of interest and repayments that you will need to include in your cashflow forecast.
You can also use this sheet to estimate the ‘gross grant equivalent’ and state aid intensity for your proposed loan and eligible project costs, using as inputs:

• assumptions on the amount and timing of cashflows
• assumptions on your credit rating (using EC reference rates as a proxy for market rates, in the absence of actual market rates that you have experienced, if appropriate)

These are indicative estimates only and are to be used as a support tool for your application and your assessment of the suitability of a loan. The permitted ‘gross grant equivalent’ intensity level for experimental development projects is 35% for a medium sized enterprise or 45% for a micro or small enterprise. In all cases, the actual amounts will be set out in formal documentation in the event that we enter into a loan agreement with you.

Balance sheet

Provide balance sheets for the past 3 years. For businesses that are less than 3 years old please provide all available years of financial accounts. You may provide balance sheets in a different format, but you must include all the required information in this spreadsheet. You may provide copies of your audited financial statements as an appendix, but this does not remove the need for you to complete this spreadsheet.

Profit and loss accounts

Provide profit and loss accounts for the past 3 years. For businesses that are less than 3 years old, provide all available years of financial accounts. You may provide profit and loss accounts in a different format, but you must include all the required information in this spreadsheet. You can provide further information in this spreadsheet to clarify and explain your financial performance.You may provide copies of your audited financial statements as an appendix, but this does not remove the need for you to complete this spreadsheet.

Cashflow forecast

Complete a forecast for the entire duration of the loan period. This should include complete cash flows for the entire business. A template is provided in this workbook for your convenience, but you will need to adapt it to make it suitable for your business. You may provide a cashflow in a different format, but you must include all the required information. You can provide further information in this spreadsheet to clarify and explain your forecast sources and uses of funds. We would expect that the information in the cashflow forecast matches to the summary of your business plan and any appendices that you provide in response to Question B4. You may wish to consider showing, at a summary level, different ‘cases’ to reflect varying levels of project success and/or business growth to demonstrate the resilience of your business or highlight where additional funding needs may appear.

Profit and loss account forecast

Complete forecast profit and loss accounts for your business for the entire duration of the loan period. A template is provided in this workbook for your convenience, but you will need to adapt it to make it suitable for your business. You may provide profit and loss accounts in a different format, but you must include all the required information. You can provide further information in this spreadsheet to clarify and explain your financial performance.

Balance sheet forecast

Complete forecast balance sheets for your business for the entire duration of the loan period. A template is provided in this workbook for your convenience, but you will need to adapt it to make it suitable for your business. You may provide balance sheets in a different format, but you must include all the required information.

We would expect that the information in these forecasts matches to the summary of your business plan and any appendices that you provide in response to Question B4. You may wish to consider showing, at a summary level, different ‘cases’ to reflect varying levels of project success and/or business growth to demonstrate the resilience of your business or highlight where additional funding needs may appear.

In a separate appendix named ’AppendixQB7-(application number)’ you can provide audited financial statements as an appendix in PDF format to support your answer.

10. Appendices

You can only include appendices in support of questions A2, A3, A7, A8, B2, B3, B4, B5 and B7 as described in the guidance for those questions. Submission of any additional appendices or documentation not described in this document will result in your application being judged as ineligible and not sent for assessment. Applications submitted with appendices that have incorrect content or do not follow the naming convention will be ineligible and not sent for assessment.

In order that assessors can open and read the appendices, each appendix must:

• conform to the maximum length specifications stated for each question
• be submitted in portable document format (PDF)
• be legible at 100% magnification
• display prominently the ‘application number’ as in the filename of the application form for example, ‘AppendixQA2-(application number eg.123456)’

Please do not submit appendices longer than the specified lengths. Assessors are instructed to only read appendices to the lengths specified in the guidance.