Innovation loans: insider tips from a credit specialist!

A businesswoman sharing her ideas with people listening to her around a table.

Insights into the role of a credit specialist and how we support you with your application.

Supporting rising stars of tomorrow by utilising my credit analysis experience, is what motivated me to join Innovate UK.

Today, I want to provide some insight into how we support you with your application.

What is the role of a credit specialist?

As you may well gather from the role title, I am not scientifically or technologically minded! An entrepreneur I am unlikely to become. However, that doesn’t mean I am not interested in the innovation being explored and developed within the UK. Quite the opposite.

For example, I may not have the bright ideas to make the UK more:

  • self-sufficient
  • sustainable
  • medically advanced.

However, I can play a part in supporting those who do.

My role as a credit specialist is to support you in presenting your application in its best light to our credit committee.

That said, I am not permitted to provide financial advice or complete the financial element of the application for you. I can, however, provide you with some useful tips on what successful applications have typically included and what to avoid.

When a credit specialist contacts you following your application, work with them! We want to support as many businesses as possible. Therefore, the questions we ask are to try and build a more robust case to present to the committee.

Our role is not to trip you up, but to ensure your business and financial plans stand up to challenges and scrutiny.

Top tips

Invest in financial support

My number one tip to anyone applying for a loan, is to invest in financial support.

There’s no requirement for businesses to have a chief financial officer (CFO) or financial director (FD) within their management team. However, if you do, utilise their skills, qualifications and experiences when completing your application.

For those who do not have a finance professional within their team, ask yourself this question. Would you have successfully developed your product or service to this stage, without investing in technically minded individuals?

I am not suggesting you must recruit an FD or CFO at this stage. My experience to date is that the financials appear to be an afterthought or the weakest link in many applications.

Taking on a loan funding is a risk to your business. It is imperative that you fully understand the undertaking you are committing to, particularly the short or medium term impact. It’s not sexy or exciting but, obtaining external advice now could save a lot of stress and increase your project’s chance of success.

Complete the financial template in full

Tip number two is to ensure you complete the financial template in full. My role is to support you in converting a successful application. I am also duty bound to ensure Innovate UK Loans remain a responsible lender, and they responsibly allocate taxpayer monies.

To demonstrate this, I need to have understood the full financial picture. I cannot truly assess affordability if several fields affecting the ‘cash available to service debt’ are missing or incomplete.

The areas generally neglected within the financial forecasts include:

  • trade debtor or trade creditors
  • tax
  • other finance requirements (such as asset finance, other loans)
  • other liabilities.

When providing your sales assumptions, consider your best, worst and base case scenarios.

Close up shot of a business audit using a calculator to calculate investment data.

Credit: Chalirmpoj Pimpisarn, iStock, Getty Images Plus via Getty Images

I want to understand what drives your base case:

  • how many customers will you need to have to achieve these revenue figures, and how likely or close are you to achieving this?
  • what will happen to the project and your finances if you experience delays (such as those that COVID-19 has caused)? Are you able to mitigate any of these risks?
  • even if you deliver an application in line with the above, keep in mind ‘relativity’.

Your application will need to demonstrate an ability to repay the loan but equally be a high-quality innovation. Your innovation may be good, but it may not outscore enough of the other applicants.

Innovation Loans Future Economy competition information

The current round is open until 11:00 on 11 May.

Don’t panic if you are not ready for this date, the next competitions’ opening dates are:

  • 12 May, closing 8 June
  • 9 June, closing 13 July.

We expect further rounds and dates will be announced nearer to the time.

Innovate UK is offering up to £25 million in loans to micro, small and medium-sized enterprises.

Loans are for highly innovative late-stage research and development (R&D) projects with the best potential for the future. There should be a clear route to commercialisation and economic impact.

Information about the loans:

  • loans of between £250,000 and £2 million are available to fund eligible R&D and innovation costs
  • the maximum term available is 7 years
  • the interest rate is 7.4%.

Further information

You can go to the Innovation Loans Future Economy competition page.
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