INNOVATION CONTINUITY LOANS: STRAND 2 AUGUST 2020 FOLLOW-ON COMPETITION – FUNDING

1. Title: INNOVATION CONTINUITY LOANS: STRAND 2 AUGUST 2020 FOLLOW-ON COMPETITION – FUNDING2. Awarding Authority: Innovate UK, GB Tel: 0300 321 4357. Email: support@innovateuk.ukri.org. (customer support services)3. Contract type: Service contract4. Description: The Awarding Authority is offering up to £210 million in loans to micro, small and medium-sized enterprises (SMEs) and third sector organisations that have a challenge in continuing, completing or following on an innovation project. Loans are for organisations that find themselves facing a sudden shortage or even unavailability of funds resulting directly from the COVID-19 pandemic.There are two parallel strands for innovation continuity loans:strand 1: for applicants who are continuing and completing a live project with an Innovate UK awardstrand 2: for applicants who have a new project that follows on from a project with an Innovate UK award that was completed in the last 36 months (this competition)We are looking to support highly innovative late stage projects with a clear route to commercialisation and economic impact.Your project must aim to develop new products, processes or services which are significantly ahead of anything similar in the field. You can also propose an innovative use of existing products, processes or services.Your proposal can use any technology from any part of the economy.Your project must focus on commercialisation, growth or scale up. We will give priority to proposals likely to lead to growth and gains in productivity.You must be able to show that you:are facing a sudden shortage or even unavailability of funds resulting directly from the COVID-19 pandemiccan cover interest paymentswill be able to repay the loan on timeneed public fundingThe competition closes at 11am UK time on the deadline stated.We expect to open one or more further competitions monthly to allow applicants the opportunity to apply at a time that suits their organisation’s needs. Innovation continuity loans will be available for commitment until 31 December 2020.Who can applyYour projectLoans of between £250,000 and £1.6 million are available to fund your project’s eligible costs. We may consider further reasonable costs arising from an increase in the cost of delivering your R&D activity as a result of COVID-19 that are not already covered by other government support. Projects must last up to 4 years and are expected to start by 31st December 2020.To take on an innovation continuity loan for a follow on project you must:be a UK registered SME or third sector organisationhave successfully completed a project supported by an Innovate UK award in the last 36 monthscarry out your project in the UKintend to exploit the results from or in the UKgive evidence that your organisation is suitable to take on a loanIndividuals, academic institutions, research organisations and large companies are not eligible for innovation loans.Only single businesses or third sector organisations can receive loans, so collaboration with other organisations cannot be funded in this competition.SubcontractorsSubcontractors are allowed in this competition and must be selected through a participant’s normal procurement process. Subcontractors can be from anywhere in the UK. If an overseas subcontractor is selected, a case must be made as to why no UK-based subcontractor can be used including a detailed rationale, evidence of UK companies that have been approached and reasons why they were unable to do so. A cheaper cost is not deemed as a sufficient reason to use an overseas subcontractor.Multiple applicationsYour organisation can only submit one application per competition round. If you submit more than one application, only the first application will be considered for assessment.Previous applicationsResubmissionsYou can use a resubmission to apply for this competition. A resubmission is a proposal Innovate UK judges as not materially different from one you have submitted before. It can be updated based on the assessors’ feedback.Failure to exploitIf you applied to a previous competition as the lead or sole organisation and were awarded funding by Innovate UK or UK Research and Innovation, but did not make a substantial effort to exploit that award, we will award no more funding to you, in this or any other competition. You will not be able to contest our decision. We will:assess your efforts in the previous competition against your exploitation plan for that projectreview the monitoring officers’ reports and any other relevant sources for evidencedocument our decision, which will be made by 3 team members, and communicate it to you in writingYour proposalThe purpose of this competition is to help businesses and third sector organisations overcome barriers to their innovations becoming a successful, commercial reality, particularly where they find themselves facing a sudden shortage or even unavailability of funds resulting directly from the COVID-19 pandemic.Your proposed project must follow on from a recently completed project supported by an award from Innovate UK ending within the last 36 months. We are looking for organisations who can demonstrate that their recently completed projects with Innovate UK have made the best progress in innovation and that their follow-on projects have the best potential for the future.Your proposal must demonstrate:a clear game-changing and/or disruptive innovative ideaa robust and deliverable business plan that addresses (and documents) market potential and needsa team, business arrangement or working structure with the necessary skills and experience to run and complete the project successfully and on timeawareness of all the main risks the project and business will face, with realistic plans to manage, mitigate and minimise the impact of each of thesesound, practical financial plans and timelines that represent good value for moneya clear, evidence based plan to deliver significant economic impact, return on investment (ROI) and growth through commercialisation, as soon as possible after project completion.We are looking to fund a portfolio of projects and organisations, across a variety of technologies and markets.Projects can last up to 4 years, of which up to the first 2 years can focus on research and development (R&D), and up to 2 further years on establishing a clear route to commercial success. We will require loan repayments over a further period of up to 5 years. However, the overall term of the loan must not exceed 7 years.Your application will be evaluated on:the quality of your previously completed project with us including completion of an independent accountants report (IAR)our satisfaction with the delivery of that project, evidenced by our own reportingthe quality of your project proposal and how it enhances the output of your previous projectour judgement on the suitability of your organisation to receive an offer of a loanWe will decline loans for organisations which:we consider unable to afford the interest and repayments on the loanhave not demonstrated that they are unable to obtain finance from other sources on suitable termsSpecific themesWe are looking for applications that show:an appropriate and evidenced loan requesta clear route to commercial success with clear, considerable potential to make a significant and positive impact on the UK economy and/or productivityrealistic, significant potential for global marketsa strong management teama strong rationale for how your project enhances the output of a recently completed project supported by an award from Innovate UKevidence of impact from the COVID-19 pandemic such as reduced access to capital, cancelled orders or increases to your costswhy you are unable to fund the project from your own resources or other forms of public or private-sector funding amidst the current financing disruptions caused by the COVID-19 pandemicthat this funding will enable the project to be carried out despite the impact of the COVID-19 pandemic.Research categoriesWe will only fund industrial research or experimental development projects.Projects we will not fundIn this competition we are not providing Innovation continuity loans to organisations:that are continuing and completing a live project with an Innovate UK awardlooking to carry out entirely new project activityWe will not provide funds to match the grant funding of any other projects.5. CPV Code(s): 79000000, 79400000, 79410000, 799000006. NUTS code(s): UKK, UKK1, UKK147. Main site or location of works, main place of delivery or main place of performance: South West (England), Gloucestershire, Wiltshire And Bristol/Bath Area, Swindon.8. Reference attributed by awarding authority: Not provided.9. Estimated value of requirement: Innovate UK is offering up to £210 million in loans to micro, small and medium-sized enterprises (SMEs) and third sector organisations that have a challenge in continuing, completing or following on an innovation project.Project sizeLoans of between £250,000 and £1.6 million are availableFundingWe have allocated up to £210 million for innovation continuity loans and will accept applications in a series of competitions.We will offer loans of between £250,000 and £1.6 million. This is based on your project proposal and our judgement of the suitability and affordability of a loan for your organisation. The Innovate UK Loans Ltd credit committee will decide the final terms, amount and length of the loan offer.Innovation continuity loans will be:Available for up to 2 years (the ‘availability period’) until the agreed end date of your project, provided that no drawdowns will be permitted after 31st March 2022. You can borrow in stages (‘drawdowns’) during this period and will pay interest at 3.7% per annum on anything you borrow, with additional interest at 3.7% accrued and deferred until the repayment period.Extended until the first commercial sales from the results of the project, up to a maximum of 2 further years (the ‘extension period’) after the end of the availability period. 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 at 3.7% per annum, with additional interest at 3.7% accrued and deferred until the repayment period.Repayable over a maximum of 5 years (the ‘repayment period’) after the availability and extension periods. You will have to repay anything you have borrowed, including interest accrued and deferred from the availability and extension periods, on a quarterly schedule. You will pay interest at 7.4% per annum on the outstanding loan amount.These are the longest periods we will consider and, since the overall term of the loan must not exceed 7 years, your application should propose how long your project will last (including the availability and extension periods) and how long the repayment period should be. These should be based on the needs of your organisation. We will consider the suitability of your proposed timings in any loan offer that we make to you.We expect to take security where it is available in the form of a mortgage debenture. We will not require personal guarantees.A summary ‘heads of terms’ document setting out the main terms and conditions of the loans is in the terms and conditions for this competition.State aidInnovation continuity loans are a form of state aid under the COVID-19 Temporary Framework for the UK.You could get a loan of up to 100% of your project costs and other, justified, R&D related costs. Since the loan will have favourable terms (particularly a below-market rate of interest) the value of this benefit over the life of the loan will be the equivalent of a grant and will be a form of state aid. The gross grant equivalent will be the present value, at the date of commitment of the loan, of the difference between the market cost of interest and fees of a similar loan (using the European Commission’s reference rates for interest) and the cost of an innovation continuity loan.Aid may be granted to undertakings that were not in difficulty (within the meaning of Article 2(18) of the General Block Exemption Regulation) on 31 December 2019, but that faced difficulties or entered in difficulty thereafter as a result of the COVID-19 outbreak. The Temporary Framework has been extended to provide public support to micro and small companies in difficulty. Micro and small companies are exempt from this test unless:they are in insolvency proceedingshave received rescue aid that has not been repaidor are subject to a restructuring plan under State aid rulesUnless you are exempt as a micro or small company, you must complete a State aid declaration in the Early Metrics Survey to confirm that your organisation was not an undertaking in difficulty on 31 December 2019.The cumulative aid that any organisation may receive under the Temporary Framework must not exceed €800,000 in total. The gross grant equivalent of an innovation continuity loan will count towards your €800,000 limit. We expect that most innovation loans, on their own, will meet this requirement. Any aid provided under de minimis is in addition to this allowance. If you are unsure if any previous funding fell under the Temporary Framework, please contact the funding body who issued you with your award.All applicants must provide a simple declaration to this effect in the Early Metrics survey found in the ‘How to apply’ section.Please refer to the:frameworkamendments to the framework from 3 April 2020 and 8 May 2020 and 2 July 2020 here3 April 2020 press release summarising theseIt is your responsibility to make sure that your organisation is eligible to receive state aid. We strongly recommend that you seek independent legal advice before applying into, and accepting the terms of, this funding award.10. Competition closes: 2.9.2020 (11:00:00).11. Address to which they must be sent: For further information regarding the above contract notice please visit: 12. Other information: Funding type Loan18 August 2020 Competition opens25 August 2020 Briefing event2 September 2020 Close date2 September 2020 11:00am Competition closes28 September 2020 Applicants notified28 September 2020 Applicants notified2 November 2020 Expected project start date and start of drawdownsBefore you startInnovate UK is unable to award funding to organisations meeting the condition known as undertakings in difficulty (UID) on 31 December 2019, unless you are an exempt micro or small company.We will not accept late submissions. Your application is confidential.Entering into a loan agreement with us is a financial commitment. You need to confirm to us that the loan is for business purposes. You are wholly responsible for ensuring that it is the right approach to financing your organisation, that your organisation is legally allowed to borrow and you will be able to fulfil the repayment obligations under the loan. You should take expert advice before submitting an application.Data ProtectionBy submitting an application, you are providing authority for Innovate UK (and any subsidiary or agency appointed to assess your application) to do checks on the financial standing of your organisation. This might include, but will not be limited to, checks with credit reference agencies (which might be recorded on your record) to determine your credit standing, identity, beneficial ownership and control, and source of existing funds.The principles that Innovate UK follows when we collect, hold or use your personal information and how you can check what details we hold are set out in Innovate UK’s personal information charter.In the application process (and as part of the loan agreement) we will require you, or the person appointed by your company to act for it, to enter into a legally binding declaration. You should take independent advice on the content of this declaration.An application for an innovation loans competition needs different information from one for a grant application. Even if you have applied for funding from Innovate UK before, you are strongly advised to read the innovation loans guidance before completing your application.What we will ask youThere are 2 parts to applications:Quality of the project: this will be evaluated by our innovation teams based on the quality of your completed project with us, our satisfaction with the delivery of that project and our evaluation of the quality of your follow-on project proposal in this application.Suitability of the organisation to receive a loan: this will be evaluated by our credit team based on your answers to the Early Metrics startup high growth index survey and your historic and forecast financial statements. You must also complete this survey, which is available here. We may need further information to reach a final decision, at which point we may contact you. However, we may also decide against offering a loan if the information you provide does not make an adequate case for your suitability for a loan.You need to be successful in both parts of the application before we will offer an innovation continuity loan. The Innovate UK Loans Ltd credit committee will decide the final terms of the loan offer.1. Project detailsOverview and project summaryBriefly describe your organisation and its current position in the marketplace. Describe your vision for growth and how you plan to achieve this. Describe your project briefly, and be clear about what makes it innovative.Your answer can be up to 400 words long.# funding opportunity# COVID-19