Notice

Competition guidance for innovation loans: infrastructure systems

Published 8 November 2017

This notice was withdrawn on 28 September 2018

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

1. Dates and deadlines

Loan competition opens	8 November 2017
Loan competition briefing event	16 November 2017
Final date for registration	Midday 10 January 2018
Submission of the full application including part A, part B, finance form and appendices	Midday 17 January 2018
Applicants informed	by 23 February 2018
Credit decision to applicants	by end of April 2018
Earliest project start date and drawdowns	3 April 2018

Please read the full loan 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 loan competition. This is for research and development projects that tackle the technical challenges described in the brief.

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. We may consider larger loans on an exceptional basis, but you must contact us to discuss this before making an application.

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

Innovation loans will be:

1. Available for up to 3 years, the ‘availability period’, when the project is underway, but the exploitation has not yet started. You may borrow in stages, making ‘drawdowns’, during this period and will pay interest on anything you borrow
2. Extended for up to 2 years, the ‘extension period’, when the project is focused on developing the commercialisation of the product. You will not be able to make further drawdowns during this period. You will not have to make repayments but you will pay interest on the amount you have borrowed
3. 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

These are the longest periods we will consider. Your application should propose the most suitable timings for your project and business. We will consider the suitability of the 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 a broad outline of the typical nature of the loan agreement that Innovate UK Loans Ltd - the “Lender”, a wholly owned subsidiary of Innovate UK - would consider making available. The summary heads of terms are indicative and not exhaustive. The lender reserves the right to amend or withdraw these terms if it considers any changes or amendments are 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 loan 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: 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 of the loan competition, as 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. Subject to prior agreement with the borrower, where bespoke activities or arrangements are required to complete a transaction, the lender reserves the right to pass on or share these costs (including the lender’s legal and valuation fees).
Interest	HM Treasury discount rate at the date the loan competition is launched. At the issue date of these summary heads of terms this is 3.7% per annum. 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. 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 corporate authorisations of the borrower approving the borrower’s entry into the loan agreement and associated documentation, and approving 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 MI. Compliance with UK tax obligations. Maintenance of adequate insurance, including specific insurance in connection with the assets of the borrower and “key person” cover. 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, 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. Any information later proven to be false or misleading may lead to a breach of the loan agreement. This 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, please select the primary type of research that you will be doing in the project and indicate the amount of loan you want to 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 submission 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
• we may consider loans outside the ranges described in section 2 in exceptional circumstances but you must contact us via customer support services at least 10 days before the registration deadline to discuss further

5. Loan competition process

For this loan 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
• has suitable credit quality
• addresses the range of themes as described in the scope for the loan competition set out in the competition brief
• represents the potential for return on investment for the company 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 loan competition
• only applications that meet the eligibility and scope requirements of the loan competition will be sent for assessment

Step 2: innovation quality assessment:

• part A 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 loan 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:
  • 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 to minimise making multiple requests over an extended period of time. Applicants will also be asked for specific consents to take up 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 shareholder 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 loan competition, it is important to understand the whole application process for innovation loans. The information contained in this guidance is specific to this loan competition. In addition, please read our guidance on innovation loans 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 form the public download area:

• finance form for this loan competition, only finance forms named ’Innovation loan project Finance Form.xls’ will be accepted into this loan 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 loan competition (mandatory)
• appendices to accompany Part A as PDF documents, labelled correctly as per the appendices guidance in section 10
• innovation loans project finance forms for your project (mandatory)
• part B application form (mandatory)
• appendices to accompany part B as PDF documents, labelled correctly as per the appendices guidance in section 10
• business financials spreadsheet (mandatory)

Scope check: Only applications that meet the eligibility criteria and scope of the loan 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 into 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: additionality
• 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
• balance sheet
• profit and loss

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 steps:

• 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 won’t 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 data and information concerning all applications with independent consultants appointed by Innovate UK to carry out interim and final evaluations of the innovation loans pilot programme.

8. Application form: Part A

Project details

Field	Guidance
Loan competition name	This field will show the full name of the Innovate UK loan 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.

8.1 Loan application declaration

Guidance

In this loan competition, we will only make loans available to suitable SMEs for the business purposes set out in the 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
• that they have made their own assessment that a loan is suitable
• that they 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.

8.2 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.

8.3 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 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 current state-of-the-art
• the difference the project will make to the competitiveness and productivity of your business

8.4 Public description of the project (not scored)

Guidance

To comply with government practice on openness and transparency of public-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.

8.5 Gateway question: scope

Guidance

How does this application align with the specific loan competition scope?

• all applications must align with the specific loan 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 loan competition

8.6 Part A loan competition questions

All questions apply to all project partners and are scored out of 10 marks.

Question A1: Need or challenge

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

• describe the main motivation for the project; the business need, the citizen-centric challenge (for urban living proposals) technological challenge or market opportunity
• describe the nearest current state-of-the-art (including those near-market/in development) and its limitations
• describe 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?
• identify 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.

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
• explain how it will improve on the nearest current state-of-the-art identified
• indicate where the focus of the innovation will be in the project (application of existing technologies in new areas, development of new technologies for existing areas or a totally disruptive approach) and the freedom you have to operate
• explain how this project fits with your current product, service lines or offerings
• explain how it will make you more competitive
• describe the nature of the outputs you expect from the project (for example, 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
• indicate the current level of readiness and how it is likely to change over the life of the project. Explain how this is likely to lead to project success, using one or all of the following readiness level scales:
  • Technology Readiness Level (TRL)
  • Manufacturing Readiness Level (MRL)
  • Commercial Readiness Level (CRL)

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
• describe the resources, equipment and facilities required for the project and how you will access them
• provide details of any vital external parties, including sub-contractors, who you will need to work with to successfully carry out the project
• highlight any gaps in the team that will need to be filled
• describe the resources that are available to take the project to market after the initial development period. This might include commercial officers 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?

• specify the markets (domestic and/or international) you will be targeting in the project and any other potential markets
• for the target markets, describe:
  • the size of the addressable market(s) for the project outcome(s) 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, explain:
  • what its size might be
  • how the project will seek to exploit the market potential
  • what makes it a suitable market
• for other markets, briefly describe 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(s) and supply or value chains outlined (will you be extending or establishing your market position?)
• describe your target customers or end users, and the value proposition to them (why would they use or buy it?)
• describe your route to market
• tell us how you are going to profit from the innovation (increased revenues or cost reduction)
• describe the approach you will take to commercialise the outputs from the project
• explain how the innovation will impact your productivity and growth (in the short and long-term)
• describe how you will protect and exploit the outputs of the project, for example, through know-how, patenting, designs, changes to business model
• outline your strategy for addressing the other markets identified during or after the project
• if you expect to use the results generated from the project in further research activities, describe how

Question A6: Wider impacts

What impact might this project have outside the project team?

• identify, and where possible measure, 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
• identify, and where possible measure, any expected social impacts, either positive or negative on, for example:
  • quality of life
  • social inclusion/exclusion
  • jobs (safeguarded, created, changed, displaced)
  • education
  • public empowerment
  • health and safety
  • regulations
  • diversity
  • any expected impact on government priorities
• identify, and where possible quantify, any expected environmental impacts, either positive or negative
• identify any expected regional impacts of the project
• where relevant please quantify 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
• outline 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 repayment period (when the loan will be repaid)
• describe your approach to project management, identifying any tools and mechanisms that will be used to ensure a successful project outcome
• highlight your approach to managing the most innovative aspects of the project
• outline the management reporting lines
• outline 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 the key risks and uncertainties of the project, including the technical, commercial, intellectual property, managerial, stakeholder communication, health, safety and environmental risks. Highlight the most significant ones (providing a risk register if appropriate)
• explain how these risks will be mitigated
• list any project inputs on the critical path to completion (such as resources, expertise, data sets)
• is the output likely to be subject to regulatory requirements, certification, ethical issues, and so on, if so how will you 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: Additionality

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

• tell us if this project could go ahead in any form without the innovation loan and if so, the difference the loan would make (such as faster to market, reduced risk)
• describe the likely impact of the project on your business
• tell us why you are not able to fund the project from your own resources or other forms of private-sector funding (what would happen if the application is unsuccessful)
• explain 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
• explain how this project represents value for money for you and the taxpayer. How does it compare to what you would spend your money on otherwise?
• justify any sub-contractor costs and why they are critical to the project

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 eligible project costs by organisation. Please note that only certain project costs are eligible for funding under UK state aid rules. See our project costs guidance for information on eligible project costs and how to complete the project finance form.

Column 1 Organisation name	Provide the full name of the lead organisation (organisation name as noted in Companies House).
Column 2 Organisation registration number	Organisations should provide the 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 carefully the definition, which 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 the project by each organisation (£)	If your project will be funded by additional sources (external or internal) alongside the loan, list the total contribution.
Column 6 Loan amount sought from Innovate UK	Enter the loan amount sought from Innovate UK for this loan competition.
Column 7 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 loan 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 8 Total (£)	The total cost of the project. This is the sum of columns 5, 6 and 7 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.

8.7 Project finance form

You must provide a project finance form using the template ‘Innovation loan 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 finance form provides a detailed breakdown on your organisation’s total eligible project costs. Please ensure that all total figures listed in your finance summary table match those stated in the ‘Form status’ tab within the project finance form.

9. Application: Part B

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.

• highlight the loan amount
• give the availability period (1 to 36 months when expenditure on R&D will occur and the loan will be drawn down)
• give the extension period (0 to 24 months when the commercialisation will occur, but no further loan drawdowns will be permitted)
• give the repayment period (1 to 60 months)
• justify why these are the terms you need for this project
• consider how long it will take you to reach commercialisation

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 be engaged with
• provide an attached organisation structure diagram of at least the top level management team
• provide up to 5 years of experience for each individual
• what will be the overall level of commitment from the management team to this project (including both R&D and commercialisation)? Highlight 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?

• outline the ownership structure of the company and provide detailed information regarding beneficial owners that own 20% or more of the business. Use the Excel document ‘Business Financials Template’ to support your answer
• you can provide an organogram with your response

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?

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

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 the main risks and uncertainties, including the technical, commercial, financial, regulatory, managerial and environmental risks. Highlight the most significant ones, providing a risk register if appropriate
• explain how these risks will be mitigated
• list any significant milestones and any 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.

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?

• how are you going to fund any additional project costs which are not covered by this loan?
• provide information on any future financial commitments
• provide a schedule of liabilities (including any director loans or shareholder loans)

Using the excel document ‘Business Financials Template’, please provide a breakdown of the following. You may use the templates provided. All of this information is required to proceed.

Business financials spreadsheet

• 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 (review the Balance sheet and Profit and Loss Accounts tabs in the Business Financials spreadsheet)
• provide cash flow forecasts for the duration of the preferred loan conditions, considering both project success and failure (review the Cashflow Forecast tab in the Business Financials spreadsheet)

Guidance: Business financials workbook

This workbook is made up of 5 main pages. 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 do not wish to 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 key information that will feed into the other parts of your application. Please ensure all sections are completed.

Ready reckoner

This enables you to test different loan conditions to identify the expected repayment and interest. Please complete this with the desired loan conditions identified in the Business Details section and Question B1 from your application form.

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, but you will need to adapt it to make it suitable for your business.

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.

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.

State aid

In the business financials spreadsheet we have included a state aid tab where you can 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 (using the outputs from the ‘Ready reckoner’ tab)
• 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. 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.

10. Appendices

You can only include appendices in support of questions A2, A3, A7, A8, B2, B3, B4 and B5 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 don’t 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 PDF
• be legible at 100% zoom/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.