Notice

Innovation loans: July 2019 open competition guidance for applicants

Published 8 July 2019

1. Dates and deadlines

Competition opens	8 July 2019
Briefing event Brighton Fusebox	23 July 2019
Briefing event London, America Square	24 July 2019
Online briefing event (recorded)	24 July 2019
Briefing event Sheffield, Eagle Labs	25 July 2019
Briefing event Daresbury STFC	30 July 2019
Briefing event Innovation Birmingham	31 July 2019
Final date for registration	Midday 11 September 2019
Submission of full application including part A finance form, appendices, index survey and financial forecasts	Midday 18 September 2019
Applicants notified	1 November 2019
Latest project start date and drawdowns	31 March 2019

Please read the 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 to suitable SMEs. This is for research and development projects that tackle the technical challenges described in the brief for this competition.

Please read our loan funding rules guidance for more information on whether the stage of R&D your project will cover and your business are eligible for an innovation loan.

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 in advance 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	During the availability and extension periods, interest will be payable quarterly at 3.7% a year on amounts outstanding. During the availability and extension periods, interest will be accrued quarterly at 3.7% a year on amounts outstanding and deferred to the repayment period. During the repayment period, interest will be payable quarterly at 7.4% a year on amounts outstanding, including the deferred interest from the availability and extension periods. Fixed interest rate, subject to any restructuring or extension of the loan agreement. 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 including interest accrued and deferred during the availability and extension periods
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. Legal charges 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

In your application form, confirm that the primary type of research that you will be doing in the project is experimental development and indicate the amount of loan you propose. This should be in line with the Innovate UK funding rules

Your application will be ineligible if:

• you have submitted the incorrect application form
• your submission does not include a completed finance form, is missing your finance forms or a completed startup high growth index survey
• any documents are not submitted in the correct file format as explained in this document

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
• has suitable credit quality
• addresses the range of themes as described in the scope for the 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:

1. Part A: application form and mandatory supporting documentation, 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.
2. Part B: the startup high growth index survey, developed by Early Metrics, 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. Part B will not affect the innovation score and will not be viewed by the assessors.

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.

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 guide for loan applicants 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. This email will also contain a link to the Early Metrics website to enable you to complete the startup high growth index survey.

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 ’Project Finance Form Loan Application V1.xls’ will be accepted into this competition. Previous versions of the project finance form will be ineligible
• business financials spreadsheet. This spreadsheet is intended to help you to forecast the future cashflows of an innovation loan

Submit your documents for part A

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 project finance form for your project (mandatory)

Complete the startup high growth index survey for part B

You should complete the survey through the survey link provided, including providing financial information (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 not eligible for assessment or out of scope with a full explanation as to why. Innovate UK reserves the right to declare applications as ineligible or out of scope.

Assessment

Once the scope and eligibility checks have been completed, part A of all eligible applications are sent for assessment

The assessments are carried out as follows:

• part A of applications sent for assessment 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
• applications will be ranked in descending order. Only applications which score over a quality threshold will be considered for detailed credit analysis and a possible loan offer

Initial credit evaluation

Applications and the outputs from Early Metrics from the startup high growth index survey (part B) will be reviewed by our credit team to identify whether the business is suitable to receive an innovation loan.

The evaluations are carried out as follows:

• Early Metrics will use the responses to the startup high growth index survey to provide a report on each applicant to our credit team
• our credit team will review part A of applications, the startup high growth index survey reports from Early Metrics and other available financial information
• the credit team will consider whether propositions appear suitable, being:
  • 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
• only applications which are recommended by our credit team will be considered for detailed credit analysis

Notification

We will notify you whether or not we will progress your application to detailed credit analysis by the date stated in the timeline, using the email address provided in the application form.

Detailed credit evaluation

Those applications which score above a quality threshold and are recommended by our credit team will be progressed to detailed credit analysis. If, following detailed analysis, we wish to make you an offer of a loan, this will include the key terms and conditions of any such loan.

The detailed evaluations are carried out as follows:

• 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

Funding offer

Only businesses that are successful in both parts of the application and are considered suitable following detailed credit analysis 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.

Feedback

Approximately 4 weeks after you have received your notification email, we will give feedback on parts A and B 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. The startup high growth index survey 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

The startup high growth index survey was developed by Early Metrics and launched in 2018 to help corporates, accelerators and innovators to create an industry standard for assessing and ranking the growth rate and potential of early stage companies. The survey contains the following sections:

• basic information
• human resources and company structure
• commercial activity
• product development
• finance and fundraising
• growth challenges
• financial information

Please make sure that you upload the final version of your application and complete the survey 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

The Knowledge Transfer Network has produced a Good Application Guide which aims to help you prepare the best application you can for an Innovate UK competition by:

• highlighting what to include in an application
• making clear what an assessor is looking for
• providing you with the KTN’s “top 10 tips”.

The KTN guide supplements this guidance for applicants, but does not replace it.

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. Part A: Application form

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.

Loan application declaration

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 need 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.

Business overview (not scored)

Briefly describe your business, and its current position in the marketplace. 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

Summary of proposed project (not scored)

Describe your project briefly, and be clear about what makes it innovative. We use this section to assign experts to assess your application.

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

Public description of the project (not scored)

To comply with government practice on openness and transparency of public-funded activities, Innovate UK has to publish information relating to funded projects. Describe your project in detail, and in a way that you are happy to see published. Do not include any commercially sensitive information. If we award your project funding, we will publish this description.

Funding will not be provided to successful projects without this description.

Gateway question: scope

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

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 or explain:

• 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 or in development, and its limitations
• any work you have already done to respond to this need, for example, if the project focuses on developing an existing capability or building a new one
• the wider economic, social, environmental, cultural or political challenges which are influential in creating the opportunity, such as incoming regulations, using our Horizons tool if appropriate

Question A2: Approach and innovation

What approach will you take and where will the focus of the innovation be? Describe or explain:

• how you will respond to the need, challenge or opportunity identified
• how you will improve on the nearest current state-of-the-art identified
• whether the innovation will focus on 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 (for example report, demonstrator, know-how, new process, product or service design) and how these will help you to target 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 technology, manufacturing and commercial readiness level scales as appropriate (which are described further in a guide produced by the Automotive Council:
  • technology readiness level (TRL) identifies the maturity and capabilities of technology
  • manufacturing readiness level (MRL) identifies the maturity of a technology from a manufacturing perspective
  • commercial readiness level (CRL) identifies the commercial maturity of a new product or service.

You can submit one appendix named ‘AppendixQA2-(application number)’ to support your answer (for example with a graphic, diagram or image to explain the technology, product or service innovation). It must be a PDF and can be up to 2 pages long. The font must be legible at 100% zoom.

Question A3: Team and resources

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

Describe or explain:

• 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
• the details of any vital external parties, including sub-contractors, who you will need to work with to successfully carry out the project
• any roles you will need to recruit for
• 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

You can submit one appendix named ’AppendixQA3-(application number)’ to support your answer (for example to describe the skills and experience of the main people who will be working on the project ). It must be a PDF and can be up to 4 pages long. The font must be eligible at 100% zoom.

Question A4: Market awareness

What does the market you are targeting look like?

Describe or explain:

• the markets (domestic, international or both) you will be targeting in the project and any other potential markets
• the size of the target markets for the project outcomes, backed up by references where available
• the structure and dynamics of the target markets, including customer segmentation and market regulation, together with predicted growth rates within clear timeframes
• the target markets’ main supply or value chains and business models, and any barriers to entry that exist
• the current UK position in targeting these markets
• the size and main features of any other markets not already listed

If your project is highly innovative, where the market may be unexplored, describe or explain:

• what the market’s size might be
• how your project will try to explore the market’s potential

Question A5: Outcomes and route to market

How are you going to grow your business and increase your productivity into the long term as a result of the project?

Describe or explain:

• your current position in the markets and supply or value chains outlined, and tell us whether you will be extending or establishing your market position
• your target customers or end users, and the value to them, for example why they would use or buy your product
• your route to market
• how you are going to profit from the innovation, including increased revenues or cost reduction
• the approach you will take to commercialise the outputs from the project
• how the innovation will affect your productivity and growth, in both 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

Question A6: Wider impacts

What impact might this project have outside the project team?

Describe, and where possible measure:

• the economic benefits from the project to external parties, including customers, others in the supply chain, broader industry and the UK economy, such as productivity increases and import substitution
• any expected impact on government priorities
• any expected environmental impacts, either positive or negative
• any expected regional impacts of the project

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

• quality of life
• social inclusion or exclusion
• jobs, such as safeguarding, creating, changing or displacing them
• education
• public empowerment
• health and safety
• regulations
• diversity

Question A7: Project management

How will you manage the project effectively?

Describe or explain:

• the main work packages of the project, indicating 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 major tools and mechanisms you will use to get a successful and innovative project outcome
• the management reporting lines
• your project plan in enough detail to identify any links or dependencies between work packages or milestones

You can submit a project plan or Gantt chart as an appendix named ’AppendixQA7-(application number)’ to support your answer. It must be a PDF and can be up to 2 pages long. The font must be legible at 100% zoom.

Question A8: Risks

What are the main risks for this project?

Describe or explain:

• the main risks and uncertainties of the project, including the technical, commercial, managerial, and environmental risks, providing a risk register if appropriate
• how you will mitigate these risks
• any project inputs that are critical to completion, such as resources, expertise or data sets
• any output likely to be subject to regulatory requirements, certification, ethical issues and so on, and how you will manage this

You can submit a risk register as an appendix named ’AppendixQA8-(application number)’ to support your answer. It must be a PDF and can be up to 2 pages long. The font must be legible at 100% zoom.

Question A9: Added value

Describe the impact that an innovation loan would have on this project and your business

Describe or explain:

• if this project could go ahead in any form without the innovation loan and, if so, the difference the loan would make, such as 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?

Describe or explain:

• the total project costs and the loan you are requesting in terms of the goals of the project and your business
• how you will finance your contributions to the project
• how this project represents value for money for you and the taxpayer
• how it compares to what you would spend your money on otherwise
• 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 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 UK 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
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, either 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 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 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.

Project finance form

You must provide a project finance form using the template ‘Project Finance Form Loan Application V1’, 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 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.

You must enter the proposed availability and extension periods for your innovation loan where indicated on the Eligible Project Costs Summary tab in the project finance form.

You can submit an appendix named ’AppendixFS-(application number)’ to provide up to 3 years of financial statements to support your application. It must be a PDF and the font must be legible at 100% zoom.

You can submit an appendix named ’AppendixBP-(application number)’ to provide a copy of your business plan to support your application. It must be a PDF and the font must be legible at 100% zoom.

There are no limits on these appendices and they will not be shown to assessors.

9. Part B: Early Metrics startup high growth index survey

We will use the startup high growth index survey that has been developed by Early Metrics to provide a structured way to capture qualitative and quantitative information about early stage businesses. Their survey and proprietary methodology for analysis and comparison of early stage businesses is used by corporates, institutional investors and accelerators. By completing this survey and providing financial information, you will enable us to evaluate the likely suitability of your business to take on a long term financial commitment.

The survey questions include a mixture of:

• requests for specific information (for example on monthly revenues or number of employees)
• selection of category responses (for example on the stage of development of your product or service)
• self-assessment scoring (for example on the level of important challenges to your growth)
• text (for example to allow you to provide a description of your business model).

This survey should take no longer than one hour to complete for a well-prepared applicant.

Early Metrics is a simplified joint stock company with €5,480 in capital, whose corporate office is located at 216 Rue Saint Denis, 75002 Paris and registered at the Paris RCS under the number 804 356 525. Early Metrics has 60 employees in 5 countries. Their UK office is at WeWork, 4 Crown Place, EC2A 4BT, London.

We will need to send your information to Early Metrics to conduct the analysis, who agree to use it according to their privacy policy.

9.1 Survey questions

Question B1: Basic information

This section of the survey contains questions which intend to capture basic information about your:

• business
• core product offering
• value proposition and business model
• target customers
• stage of maturity

Question B2: Human resources and company structure

This section of the survey contains questions which intend to capture information about your:

• founders
• shareholders
• board of directors and advisors
• employees

Question B3: Commercial activity

This section of the survey contains questions which intend to capture information about your:

• past, current and forecast commercial revenues
• past, current and forecast customer numbers
• direct and indirect sales channels
• international activities
• social media or other online presence

Question B4: Product development

This section of the survey contains questions which intend to capture information about your:

• past, current and forecast stage of technical development for your core product or service
• plans for developing and launching new products or services
• resources for research and development, product development and launch
• intellectual property

Question B5: Finance and fundraising

This section of the survey contains questions which intend to capture information about your:

• revenues
• costs
• cash and other current assets
• liabilities
• strategy and plans for raising additional equity and debt finance

Question B6: Growth challenges

This section of the survey contains questions which intend to capture your self-assessment of the main challenges and risks to your business growth, including:

• attracting and retaining employees
• implementing processes
• managing cashflow
• creating and maintaining a strong company culture
• winning trials or pilots and converting these into commercial contracts
• attracting and retaining users and customers
• entering international markets
• complying with regulations or policies and adapting to changes in regulatory environments
• protecting intellectual property
• obtaining additional finance

Financial information

You should provide:

• summary historic profit and loss accounts and balance sheets for the past 3 years (or since incorporation if less than 3 years)
• summary forecast cash flows, profit and loss accounts and balance sheets for the full duration of the preferred loan conditions

This information should be inputted to the Cashflow Forecast, Profit and Loss Forecast and Balance Sheet Forecast templates and uploaded to the survey form.

This financial information is to enable us to make a full credit evaluation of your business and determine whether the loan requested is suitable for your business.

Innovation loans will not be offered to businesses in difficulty, as set out in the General Block Exemption Regulations for state aid. An example of a SME in difficulty would be one over 3 years old whose accumulated losses exceed 50% of their subscribed share capital.

Loans will also be declined for businesses:

• we consider unable to afford the interest and repayments on the loan
• that have not demonstrated that they are unable to obtain finance from other sources on suitable terms

Business financials workbook

On the FTP site we have provided a workbook to assist you in preparing the financial information to be submitted in the Startup High Growth Index survey.

The business financials worksheet enables you to input balance sheet, profit and loss and cashflow information that should then be uploaded to the Early Metrics survey.

The repayment calculator template worksheet enables you to test different loan conditions to identify the amount and timing of expected repayments and interest that you will need to include in your cashflow forecasts, profit and loss accounts and balance sheets.

Innovation loans are a form of state aid, offered by Innovate UK under its notified scheme for support for research and development. The aid offered is the ‘gross grant equivalent’ of the benefit in the loan terms and conditions. The difference between the ‘market rate’ and the rates we will charge represents a benefit. The rate of interest (at 7.4%) and absence of fees are below those that a commercial lender would typically charge borrowers who we expect to receive innovation loans. The value of this benefit over the life of the loan, at today’s value, is the ‘gross grant equivalent’ for state aid calculation purposes. This ‘gross grant equivalent’ may not exceed the permitted intensity level, as a percentage of eligible project costs. For experimental development projects, the maximum permitted intensity is 35% for a medium sized enterprise or 45% for a micro or small enterprise.

10. Appendices

You can only include appendices in support of questions A2, A3, A7 and A8, as described in the guidance for those questions and to provide historic financial statements and a copy of your business plan.

Submission of any additional appendices or documentation not described in this guidance 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)’

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