Our track record crafting winning grant applications coupled with the financial expertise to navigate the rigourous financial assessment stage will improve your chances of winning an Innovation Loan.
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The Two-Part Assessment: Innovation vs. Affordability
Many strong innovation projects are declined, not because the technology is weak, but because the business fails the financial assessment. Innovate UK Loans Ltd (IUKL) assesses every application in two distinct phases:
1. Innovation Quality: Assessed by independent technical experts similar to grants.
2. Credit Suitability: Assessed by the IUKL Credit Team to ensure your business can afford the debt and the prospects for success are realistic.
The Credit Team scrutinises your business plan, historical performance and, most critically, your long-term financial forecasts to confirm you can meet the ongoing financial obligations. If you cannot prove affordability and viability, your application will be rejected, regardless of your innovation score.
Our Financial Expertise Guarantees Covenant Compliance
A significant challenge for applicants is demonstrating compliance with the financial covenants that the loan agreement requires. Grantmi specialises in helping to build the precise financial models and narrative required to prove your compliance with these two key metrics:
1. The Liquidity Ratio (≥1.1× to be maintained throughout the loan)
This ratio measures your ability to meet your short-term liabilities (like interest payments) using your current assets (cash, debtors, stock).
Liquidity Ratio=Current Liabilities divided by Current Assets
The requirement is that your Current Assets must exceed your Current Liabilities by at least 10% (Ratio≥1.1×) throughout the entire loan period, including the availability phase.
Grantmi's Solution: We help you model your working capital and project cash flows to ensure your business maintains this minimum 1.1× ratio in every single quarter of the forecast, providing the Credit Team with confidence in your short-term stability.
2. Debt Service Coverage Ratio (DSCR) (≥1.2× during repayment)
This ratio measures your free cash flow (specifically, EBITDA) against your required loan interest and principal repayments. It shows your long-term ability to repay the debt.
The requirement is that Your Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) must be at least 1.2× your quarterly debt service requirements during the repayment phase.
Grantmi's Solution: We help you construct robust, five-year forward-looking financial statements that clearly demonstrate that the commercialisation of your project will generate sufficient EBITDA to meet the 1.2× DSCR requirement from the moment the repayment phase begins.
DSCR=Total Debt Service (Interest + Principal) EBITDA
By focusing on these specific financial hurdles, Grantmi ensures your application can move past the Credit Team and secure the funding your innovation deserves.
Fact finding to get insight into your business and activity, understand your objectives
We identify potential grant funding calls which can work for you
Scope out a project plan and a budget for the grant/loan project
We write a compelling grant application and help with your financial modelling
Your application is submitted to Innovate UK
You receive your decision from the funding body
As for grants, the process is competitive. The assessors look at the quality of your innovations, your route to commercialization, and the economic and social impacts of your project, similar to grants.
For winning applications who score highly on the scoring criteria, there is then an assessment by a team of credit analysts who will look at the financial aspects of your application both from the perspective of your business financials now and where they could be following your project.
Innovate loans are attractive as they can cover up to 100% of eligible project costs, which can mean substantial financial support for innovative projects (up to £2m).
They are made on generous terms, offering below-market interest rates during project execution (3.7%), during which time only the interest needs to be paid quarterly, with a rate of 7.4% during the loan repayment period. The total term, including execution and repayment, can be up to seven years.
They are designed to support late-stage research and development projects with strong commercial potential, helping businesses bring new products, processes, or services to market.
These loans are particularly advantageous for projects requiring significant capital expenditure, like a pilot plant or demonstrator units or to move an MVP to market ready product.
Innovation loans are often more accessible than grants for the right applicant with the right innovation project, making it easier for businesses to secure funding.
For innovation loans, your project will be a highly innovative late-stage research and development (R&D) project with the best potential for the future. There must be a clear route to commercialization and economic impact.
Your project must lead to innovative new products, processes, or services that are significantly ahead of others currently available, or propose an innovative use of existing products, processes, or services, and which you can demonstrate have a high chance of achieving commercial success. It could also be a new or innovative business model.
Your project must focus on one or more of the future economy areas included in the Innovate UK plan for action.
You will also need to demonstrate that you:
1. Need public funding to undertake your project
2. Can cover the interest payments
3. Will be able to repay the loan on time
If you are successful with your application, the project is managed and monitored in a similar way to grants. We can provide assistance with this if required.