You will be required to pay interest at the rate set out in the competition brief for the competition you’re applying into on the amount that you borrow.
During the availability period and extension periods, you may pay interest on the amount that you borrow every three months from the date that your project starts and also accrue interest that will be deferred until the repayment period.
During the repayment period, you will pay interest on the amount that you borrow, including any interest accrued and deferred from the availability and extension periods.
Interest is payable only on the amount of money you have borrowed at the time the interest is due, not the total amount of money you intend to borrow.
For example, if the interest rate is set at 7.4%, with part payable and part deferred, if you draw down £10,000 in the first three months from a total loan amount of £100,000, you will need to pay interest (at 3.7% per year) on the £10,000 only. You will also accrue interest (at 3.7% per year) that will be deferred until the repayment period.
The rate of interest is fixed, but is subject to any restructuring or extension of the loan agreement.
Payments should be made by direct debit to Innovate UK Loans Ltd via the loan administrator.
You will need to repay your loan during the repayment period. We expect that this will be when you are exploiting the results of your project commercially through selling your product or service.
You will need to repay the balance of the full amount that you have borrowed, including any deferred interest from the availability and extension periods, with interest at the rate set out in the brief for the competition you apply into, every three months, spread over the repayment period. The amount you will pay back will be as agreed as part of your loan agreement.
Payments must be made via direct debit to Innovate UK Loans Ltd via the loans administrator.
The loans administrator will send you a notification on the status of your repayments every three months, which will include the outstanding amount of payment due. You will also receive a yearly overview of your progress.
When the total amount borrowed is paid off, you will receive written notification from the loan administrator.
During this period you will continue to provide financial information on your business every three months, plus an annual credit review, to our credit team to ensure that the conditions in the loan agreement are met.
If you want to repay the loan early, you will be able to do so without penalty. Speak to our credit team.
If you encounter problems with paying back your innovation loan
If you encounter any issues relating to paying back your innovation loan or expect to do so under the agreed terms you will need to discuss this with our credit team immediately. We will work with you to agree on a way forward.
If you default on your loan
Events of default on an innovation loan may include:
- missed payment, if not rectified within the time periods set out in the loan agreement
- failure to comply with obligations set out under the loan agreement
- change of control of the business, without our prior written consent
- the departure of a key person from the business or project, without our prior written consent
- cross-default, if you default on another loan agreement
- if it becomes unlawful to comply with obligations set out under the loan agreement.
If you encounter any issues relating to your innovation loan or expect to do so under the agreed terms you will need to discuss this with our credit team immediately. We will work with you to agree on a way forward.
In the case of default, we will work through our loan administration service provider to recover any amounts due. This may include enforcing security over assets, such as intellectual property or other assets purchased, that you have pledged to us under the loan agreement.
We may engage a collection agency to act on our behalf to recover costs. In terms of where we rank against other creditors in the debt waterfall, we expect to rank ahead of junior lenders such as loans from company shareholders or directors, unsecured trade creditors and shareholders. We would expect to rank behind preferred creditors and commercial senior secured lenders.
If you still have questions about innovation loans
Telephone: 0300 321 4357
You should also take independent advice.