Grant Funding In Detail

A grant is a sum of money given by a government, organisation, or institution to support a specific purpose—such as research, business development, education, or community projects. Unlike loans, grants do not need to be repaid, but they often come with conditions or reporting requirements. Grants are typically awarded based on merit, need, or alignment with the funder’s goals, and recipients may need to apply through a formal process.

Pretty much anything you could imagine might be applicable to attract grant income. However for business’s you are most likely to consider either innovation grants for technology, product innovation and R&D activities, employee grants in order to either employee or keep staff or capital grants in order to invest in capital, buildings or relocation to specific areas.

It’s best to start considering grants well in advance, this could be up to 6 – 12 months before you need the funding. This is due to the application windows being short and competitive and you need to be well prepared for these. The decision timelines can often take weeks or more likely months to be approved and for the funding to be received.

There are a large number of bodies who award grants to UK businesses. As the UK’s innovation agency, Innovate UK offers funding programmes across a range of sectors. For the eight sectors highlighted in the UK Government’s Industrial Strategy (June 2025), we note below some examples of other relevant funding bodies and programmes:

• Advanced Manufacturing – DRIVE35 programme (Department for Business and Trade), EIC Accelerator.
• Digital and Technologies – Made Smarter, Digital Europe Programme (European Commission).
• Life Sciences – Life Sciences Innovative Manufacturing Fund (Department for Science, Innovation and Technology), Invention for Innovation (i4i) (NIHR).
• Clean Energy Industries – TechX Clean Energy Accelerator (Net Zero Technology Centre), Clean Energy Fund (Ambition North Wales).
• Defence – Defence and Security Accelerator (DASA) Open Call, DASA Competition: Innovation in Support of Operations.
• Creative Industries – UK Games Fund, Creative Enterprise Business Builder (Creative UK).
• Financial Services / Professional and Business Services – IUK Smart Grants, Digital Transformation Flexible Fund (Northern Ireland only), Leadership Project Grant Fund (The Institute of Leadership).

Eligibility depends on being a UK-registered business, either a limited company, partnership or sole trader, whose primary operations are in UK and aim to develop innovation within the UK.

Innovate UK prioritises support for SMEs, but larger organisations can apply especially when collaborating with SMEs or research partners. Entities such as Academic Institutions, Charities, Public Sector organisations, community interest companies and research and technology organisations can participate but typically are unable to lead unless specified by the competition.

Innovate UK offers various competitions, with multiple competitions that are currently live. The most commons competitions tend to be:

• Smart grants: Up to £1m for SMEs and startups with a disruptive technologies across a range of sectors. Due to high application rates and low chances of success, these are currently on pause.
• Innovation loans: Loan for £100,000 to £5,000,000 for late stage R&D projects.
• Investor Partnerships: Best for those SMES seeking both grant and private investment and equity funding growth.
• Knowledge Transfer Parternships: For collaborations with Universities.
• Sector specific competitions: These can range from Net Zero, Agri-Tech, HealthTech etc and will have a specific scope for each separate competition.

Choosing the right one depends on your project’s stage, scope, and commercial potential.

Whilst there is no formula for a guarantee of success when applying for an Innovate Grant, there are a number of elements that a strong application would likely include. Some of these include:

• A clear groundbreaking unique innovation with genuine commercialisation potential. This innovation should also clearly align within the scope of the specific funding call.
• A realistic and well-structured project plan that breaks down into work packages with clear milestones and deliverables.
• Well written technical applications which make the technical approach understandable even to non-specialists.
• An experienced and capable team, including collaboration partners both from an academic side and a commercial side.

Innovate UK grants are highly competitive, with success rates typically ranging from 4% to 10%, depending on the specific competition. This is because Innovate UK receives a large number of high-quality applications for each competition. These high-quality applications are often supported by grant writing partners, who have expertise in writing grant applications. When you combine the number of applications with the limited funding pots per round, it does mean only the most compelling proposal tend to be selected.

Yes, you can submit multiple applications across different competitions. Likewise you can be a collaborator on several projects at the same time.

However please note that you cannot be the lead applicant on more than one live grant application at a time for the same competition. If you try to submit duplicate applications, Innovate UK may reject them if they are too similar.

If you are unsuccessful for a grant, you are able to reapply for the same grant, usually up to two times, however this may vary.

The Innovate UK Innovation Loans Programme offers loan funding to UK registered micro, small and medium-sized enterprises (SMEs) for innovative late-stage research and development (R&D) projects with strong commercial potential that will significantly boost the UK economy. The programme focuses on businesses that are developing new products, services, or processes with the potential to transform the future economy areas included in the Innovate UK plan for action.

UK-registered SMEs working on late-stage R&D projects with strong commercial potential are eligible for Innovation Loans. In addition, please note that:

• These loans are for single applications and not for collaborative projects.
• The majority of the development work must be carried out in the UK.
• You must intend to exploit the results primarily within the UK.
• You must show you can’t access private funding and have the financial capacity to repay the loan.

Projects must be highly innovative, close to market readiness, and aligned with Innovate UK’s strategic themes (e.g. net zero, health, advanced tech). Early-stage R&D is not eligible, as the focus is more on later stage development which has a clear route to commercial success. It will be important to demonstrate how the innovation will generate revenue, scale or provide a competitive advantage.

Loans can range from £100,000 to £5 million, covering up to 100% of eligible costs, and are offered on flexible repayment terms for businesses.

Repayment terms can extend up to 7 years, with flexible drawdown and interest-only periods. The repayment terms allow the loan to be split into three phases:

• Availability Period: Where you will be drawing down on funds during the project.
• Extension Period: This is an optional phase if the project requires more time.
• Repayment Period: This period begins after the project has ended and the commercialisation has begun.

The interest rate is 7.4%, but only 3.7% is paid during the initial project phase (i.e. both the availability period and the extension period). During these periods the additional 3.7% interest is deferred and added to the repayment period.

Repayments begin after the project ends and include deferred interest and principal. These are repaid quarterly via direct debit.

You’ll need a business plan, financial forecasts, and a technical project plan. The financial forecasts will include accounts for the prior three years or since incorporation if shorter. You will also need to provide P&L, balance sheet and cash flow forecasts for the entire loan period.

Innovate UK will assess your financial health, via credit checks, and will need to meet and maintain certain financial covenants.