Defence Innovation Loans is sponsored by Defence and Security Accelerator (DASA) in partnership with Innovate UK Loans Ltd. This loan scheme addresses a funding gap for mature defence innovations (TRL 6+) by providing affordable debt funding to help SMEs convert proven prototypes into deployed solutions.

Competition Document: Defence Innovation Loan - GOV.UK This publication is available at https://www. gov.uk/government/publications/competition-defence-innovation-loans/competition-document-defence-innovation-loan The Defence and Security Accelerator ( DASA ) supported by Innovate UK Loans Ltd (Innovate UK) are working together to offer a Defence funding competition: the Defence Innovation Loan.

This service provides an opportunity for single small and medium enterprises (SMEs) with solutions to defence themed problems to apply for a Defence Innovation Loan of between £100,000 and £1 million with a below market interest rate of 7. 4% per annum. This loan can be used to cover up to 100% of eligible project costs to aid the commercialisation of the solution.

Innovate UK provide further information on innovation loans (not Defence specific) here . DASA will conduct a full innovation assessment by defence stakeholders on submitted applications, focusing on desirability, feasibility and viability of the solution, as per the standard DASA competition process , using Defence Innovation Loans assessment criteria .

Please note that successful applications will be governed by the Innovate UK Innovation Loans Ltd Terms and Conditions rather than the standard DASA Terms and Conditions. Applicants should review the Summary of General Terms and Conditions and Terms and Conditions for details. In conjunction with the DASA assessment, Innovate UK will also undertake a credit evaluation of your business to assess suitability for a Defence Innovation Loan.

These checks will include suitability to make repayments and the strength of the company management team to deliver against the plan. DASA will then consider the applications at a Decision Conference taking into account the outcome of both the DASA assessment and the Innovate UK credit check.

Businesses which are recommended for funding at this ‘initial outcome’ stage will be subject to a detailed loan suitability assessment by Innovate UK. Innovate UK will offer successful applicants the opportunity to take out a loan to help convert a mature innovative solution into a viable business proposition which may be capable of competing for Defence procurement. 2.

Competition Key Information 12:00 Midday on 13 May 2025 (BST). See Schedule for all cycle dates. From £100,000 to £1 million.

See Loans for further details. Technology readiness level Your company must: 1) be a UK registered SME , 2) plan to exploit the results in the UK or overseas, for the benefit of the UK economy and / or productivity and 3) be suitable to take on a loan. See Eligibility for full details.

22 July 2025. See Schedule for dates of feedback release for all cycles. 2.

1 Where do I submit my application? There are two parts to your application, which need to be submitted via different online portals: The DASA innovation application, which is submitted via the DASA Online Submission Service for which you will require an account. If you are not already registered to use this portal, you can register here .

The innovation loan request application, which is submitted through the Innovate UK submission portal (a link to the portal is also provided in the DASA Submission Service). You will need to start the DASA application form first and use Your Submission Number (starting ‘ACC’, found in the Summary section of your DASA application) in the Innovate UK application form.

Your application will not be processed unless both parts of the application (i.e. DASA and Innovate UK) have been submitted. Only applications submitted through the DASA Online Submission Service, and the Innovate UK submission portal as outlined above, will be accepted. Before submitting, please ensure you have completed the actions in the Before you submit section.

For further guidance on what to expect during the submission process and how your application will be assessed, please see the following GOV.UK pages and forms: Assessment process and criteria Assessment criteria for Defence Innovation Loans Defence and Security Accelerator: ethical, legal, and regulatory guidance MODREC Guidance for Suppliers Competition Terms and Conditions How to get in touch with your Innovation Partner – you will be asked to confirm you have done this when you submit your application; see Before you submit .

Please send queries about your submission to the DASA Help Centre: accelerator@dstl. gov.uk 3. 1 Video: Defence Innovation Loans – Everything you need to know A video has been recorded to give you all the information you need to know about applying for a Defence Innovation Loan; you can watch the video below.

Defence Innovation Loans – Everything you need to know This video replaces past webinars, but you can still refer to Clarification questions from previous webinars . To support applicants with their financial submissions, Innovate UK is running three deep dive workshops.

Although primarily aimed at Innovate UK’s innovation loans, the content is highly relevant and Defence Innovation Loans applicants are welcome to attend; the dates are as follows: Deep dive workshop 1: 26 March 2025 11:00 to 12:30 (GMT) Deep dive workshop 2: 1 April 2025 14:00 to 15:30 (BST) Deep dive workshop 3: 10 April 2025 10:00 to 11:30 (BST) These workshops provide an opportunity to discuss one of three areas of the financial submission in depth (presenting credible forecasts, demonstrating effective management of liquidity and working capital & evidencing adequate capitalisation).

To register, you will need to first register for the Innovate UK applicant briefing for the innovation loans. You do not need to attend this (it’s aimed at innovation loans applicants), but once registered you can then book onto one of the above workshop dates, subject to availability. To register and for more information about the workshops, see here .

One participant per organisation can attend; they will choose one of the three topics, listed above, to deep dive into at the workshop. It is advised to watch the Defence Innovation Loans webinar before attending. Please note that as the workshops are primarily aimed at innovation loans applicants, some information such as the dates for applying and the amount of loan offered will be different to that for the Defence Innovation Loans.

For the avoidance of doubt, the Defence Innovation Loans competition information should be referred to as the single point of reference for information about Defence Innovation Loans applications; the Innovate UK workshops are offered solely as an option to applicants interested in better understanding how to complete the Innovate UK business and financials submission.

To take on a Defence Innovation Loan for a project you must: intend to exploit the results in the UK or overseas to make a significant and positive impact on the UK economy and / or productivity give evidence that your business is suitable to take on a loan. Only SMEs are eligible to apply for Defence Innovation Loans; individuals, academic institutions, research organisations and large companies are not eligible.

Only single businesses can receive innovation loans, so joint applications with other organisations cannot be funded in this competition (subcontractors are allowed, see further details below). For more information on company sizes, please refer to the company accounts guidance (this is a change from the EU definition unless you are applying under State Aid).

Subcontractors 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 subcontractors can be used including a detailed rationale, evidence of UK organisations that have been approached and reasons why they were unable to participate.

Russian subcontractors are not permitted under current restrictions and any application involving any Russian entity as lead, partner or subcontractor will be rejected at pre-sift (see What we are NOT looking for and Pre-sift Criteria below for full details). Cost is not deemed as a sufficient reason to use an overseas subcontractor. 4.

2 Multiple applications Your business can only submit one application per Defence Innovation Loan competition cycle. If you submit more than one application in any one cycle, only the first application will be considered for assessment. No Innovate UK loan must have been awarded for the same project.

As part of your application, you will be asked to confirm that you have spoken to a member of the DASA Business Growth and Finance team regarding your innovation, and that they confirmed its suitability for the Defence Innovation Loans competition.

This can be done by using the Contact DASA Form to contact a DASA Innovation Partner, who will initially explore the suitability of your idea within the context of the requirements of the competition. An Innovation Partner may advise you to submit an Innovation Outline (IO), which is primarily used to further explore the relevance of your idea to the competition. The Innovation Partner will be able to advise you on the IO content.

Where appropriate, applicants will then be referred to a member of the DASA Business Growth and Finance team for further support. How to submit an Innovation Outline IOs must be submitted through the Submission Service regardless of an established relationship with an Innovation Partner.

To submit an IO: select the service category DASA Innovation Outline from the service name select Innovation Outline: Defence Innovation Loans Please note that for this competition, your submitted IO will not be shared with stakeholders, but will be used to further explore the relevance of your idea to the competition.

Due to the broad, wide-reaching nature of Defence Innovation Loans, DASA cannot guarantee a response to an IO before the current competition cycle closes. All information you provide to us as part of your IO, that is not already available to us from other sources, will be handled in confidence. We will only share the information with those who can establish whether your innovation is within scope of the competition.

The information will only be used for the purposes for which it is provided to us. It won’t be used for other purposes, without us having obtained the necessary rights and permissions to do so. Submitting an IO is not a mandatory criterion of this competition.

However, you will be required to state in your application the name of the Business Growth and Finance team member you have spoken to, and that they confirmed the suitability of your submission to the Defence Innovation Loans.

Read the supporting information Please refer to the following guidance documents, to aid your submission to the Defence Innovation Loans: Key FAQs document - for further general information about Innovation Loans from Innovate UK Checklist – please make sure you refer to this and ensure all criteria are met before submitting Loans of between £100,000 and £1 million will be offered; applications requesting loans outside of these amounts will be ineligible and will not be considered.

We will ask you to detail the total costs required for your technical project plan. If you are not requesting a loan to cover all of these costs, we will ask you to indicate this and detail where the rest of the funding will come from and how much it is. The amount offered will be based on your technical project plan and Innovate UK’s judgement of the suitability and affordability of a loan for your business.

The Innovate UK Loans Ltd credit committee will decide the final terms, amount and length of the loan offer. Innovation loans will be: Available for up to 3 years to cover project development costs when the project is under way, but the exploitation has not yet started (the ‘availability period’). You can borrow in stages (‘drawdowns’) quarterly in advance 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 that will be considered and, since the overall term of the loan must not exceed 7 years, your application should propose how long the project (which includes the availability and extension periods) will last and how long the repayment period should be.

These should be based on the needs of your business. The suitability of your proposed timings will be considered in any loan offer that is made to you. More details of our approach are set out in the ‘heads of terms’ Summary of General Terms and Conditions of the loan.

General guidance on innovation loans can be found here . 6. What we are looking for Innovations must be fairly mature at TRL 6 and above to ensure that the solution can be commercialised within the time scale of the innovation loan.

Applications must clearly evidence a Defence need for the innovative solution.

The applicant must include evidence of: a high quality later-stage R&D project with viable opportunity for growth a suitable team, with strong management and delivery approach to the project a strong defence requirement for the capability a clear route to commercial success and focus on growth or scale up a plan to cover interest payments on a quarterly basis a plan to repay the loan within 7 years of contract award why public funding is required to be able to carry out the project why you are unable to fund the project from your own resources or other forms of private-sector funding development of a new and innovative product, process or service which can provide a competitive advantage over anything similar in the field a clear, evidence-based plan to deliver significant economic impact, return on investment (ROI) and growth through commercialisation, as soon as possible after project completion a drawdown schedule that adheres to the terms of the loan (i.e. up to 3 years availability period), and that matches the information provided to Innovate UK.

7.

What we are NOT looking for We are not interested in applications that: do not demonstrate a strong Defence requirement and capability need are from SMEs that are unable to afford the interest and repayments on the requested loan have not been submitted in two parts as required, i.e. an application to DASA and an appropriate, evidenced Innovation Loan Request to Innovate UK; details of how to demonstrate this are outlined in Where do I submit my application have not shown a clear route to commercial success with potential to make a significant and positive impact on UK Defence request a loan of less than £100,000 or greater than £1 million are not highly innovative research and development projects are consultancy, paper-based studies, market surveys or literature reviews are projects which purely conduct data science / analytics are projects that simply demonstrate or purchase existing equipment or off-the shelf products, without undertaking further development of technology or techniques to meet the challenges proposed (unless applied to this challenge in a novel way) are projects that offer no viable long-term prospect of integration into defence capabilities are projects which are already being developed elsewhere within UK defence are projects which are already being funded or in the application stage of funding elsewhere require procurement, commercial, business development or supply chain activity with any Russian entity as lead, partner or subcontractor; this includes any goods or services originating from a Russian source (under current restrictions, this competition will not fund such activities).

8. Critical elements to include There are two elements to the Defence Innovation Loan application: Innovation Application – submitted through the DASA submission service . Innovation Loan Request Application (Business and Financial Assessment) – submitted through the Innovate UK submission portal , detailed guidance on the application process can be found here .

8. 1 DASA Innovation Application When submitting an application, you must complete all sections of the online form and include an appropriate level of information to allow assessment of the bid. A list of other current or recent government funding you may have received for this project should be included if applicable.

The following paragraphs outline the key information that should be included in your application to enable UK Government stakeholders to make a full assessment. Please note that Assessors will spend 90 minutes on each application, so you should ensure you include an appropriate level of information and detail to allow for the application to be given a full and thorough assessment in this time.

Public facing information When submitting your application, you will be required to include an application title, a value proposition statement, and a short abstract. The title, value proposition statement and abstract you provide will be used by DASA , and other government departments, to describe the project and its intended outcomes and benefits.

It will be used for inclusion at DASA events and included in documentation such as brochures. Therefore, please ensure there is no confidential information in the title, value proposition statement or abstract of your application. Value proposition statement A short statement to summarise the value, usually using figures or percentages, of the project for UK Defence.

For example, our X technology will reduce time, increase speed, allow more to be done, by Y amount for Z customer or group of customers. A technical project plan with clear milestones and staged drawdowns is required to outline the work that will take place in the availability period.

Milestones must be well defined and designed to provide evidence of progress against the technical project plan; drawdowns will be subject to project progress, Innovate UK monitoring officer sign-off and financial and reporting covenants being met. Your application must demonstrate how you will complete all activities / services within the timescales.

You may wish to outline plans to commercialise the project at the end of the availability period and how you might intend to support this.

You might wish to include an outline of the expected market price, customer base, number of units to be sold etc. Ethical, legal, and regulatory factors You must identify any ethical, legal, and regulatory factors within your application, such as work involving humans or animals, and how the associated risks will be managed, including break points in the project plan if approvals are not received.

MOD Research and Ethics Committee (MODREC) approvals can take up to 5 months, therefore you should plan your work programme accordingly. Please refer to DASA ’s ethical legal and regulatory guidance to see whether your application will require MODREC or other regulatory approval, and contact DASA for further information if you are still unsure.

Government Furnished Assets (GFA) GFA could be equipment, information or resources that are government-owned and loaned (on a free-of-charge basis) for your work. You should identify any incidences where you are in receipt of GFA (including examples) for the work you are expecting to carry out under the terms of the loan. If any GFA is required, it is your responsibility to arrange this directly with MOD.

Please note that being in receipt of a loan will not grant any preferential treatment with regards to the provision of GFA, and there is no guarantee GFA can be provided. 8. 2 Innovation Loan Request To enable Innovate UK to consider your suitability for an innovation loan, you must provide further business and financial information.

The following paragraphs outline the key information that should be included in your business and financial submission to enable Innovate UK to make a full evaluation. You must provide us with information about your business by answering questions in the form of an online survey.

These questions will cover: People / company structure You must provide us with financial information by completing a financial submission spreadsheet and uploading it at the end of the survey. The financial information required includes historic and forecast information to cover the full period of the loan for: Entering into a loan agreement with Innovate UK Loans Ltd is a financial commitment.

You need to confirm to Innovate UK that the loan is for business purposes. You are wholly responsible for ensuring that it is the right approach to financing your business, that your business 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.

By 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 business. 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.

Failure to provide any of the above listed, in either the DASA Innovation Application (submitted to DASA ) or the Innovation Loan Request (submitted to Innovate UK) will automatically render your application non-compliant, and it will be pre-sifted out prior to assessment; see Pre-sift Criteria . 9. Subsidy Control and State Aid This competition provides funding in line with the Subsidy Control Act 2022.

Further information about the Subsidy requirements can be found within the Subsidy Control Act 2022 (legislation. gov.uk) . You could get a loan of up to 100% of your eligible project 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. 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 reference rates for interest) and the cost of an innovation loan.

For experimental development projects this grant equivalent, as a proportion of the eligible project costs, can be: up to 45% if you are a micro or small business up to 35% if you are a medium-sized business. We expect that most innovation loans will meet this requirement. The general guidance on innovation loans contains more information about the use of a grant equivalent calculation for an innovation loan.

Innovate UK is unable to award organisations that are considered to be in financial difficulty. Innovate UK will conduct financial viability and eligibility tests to confirm this is not the case as part of the credit evaluation of applications. 9.

2 European Commission State aid EU State aid rules now only apply in limited circumstances. Please see the Windsor Framework to check if these rules apply to your organisation. If you are unsure about your obligations under the Subsidy Control Act 2022 or the State aid rules, you should take independent legal advice.

We are unable to advise on individual eligibility or legal obligations. You must always make sure that the funding awarded to you is compliant with all current Subsidy Control legislation applicable in the United Kingdom. This aims to regulate any advantage granted by a public sector body which threatens to, or actually distorts competition in the United Kingdom or any other country or countries.

This award is classified as a Subsidy which does not form part of your Minimal Financial Assistance or De Minimis allowance. All applications will undergo pre-sift before assessment, where they will be checked for compliance with the competition document requirements. Only applications demonstrating compliance with the competition requirements and DASA pre-sift criteria will be taken forward to full assessment.

Defence Innovation Loans pre-sift criteria are as follows: The application clearly outlines the Defence need for the innovative solution. The application fully explains how it meets the DASA criteria (Desirability, Feasibility, and Viability) in the relevant questions in Step 3 of the submission service.

The application contains a financial plan, a technical project plan and a resourcing plan that demonstrate how the work proposed will be completed within the proposed timescale. Loan value is between £100,000 and £1m. The final drawdown must be scheduled to take place less than or equal to 3 years from T0 where T0 is the date the contract is agreed by both parties.

The innovation is at TRL 6 or above. The application is made in the name of a single UK registered SME . The application clearly details how the results will be exploited, either in the UK or overseas, with significant positive impact on the UK economy and / or productivity.

An eligible* innovation loan request for the project has been submitted to Innovate UK. (* Eligibility of the innovation loan request is determined by Innovate UK.) The application is the sole submission of the organisation into this cycle of the competition.

The application involves no procurement, commercial, business development or supply chain activity with any Russian entity as lead, partner or subcontractor. This includes any goods or services originating from a Russian source. (Under current restrictions, this competition will not fund such activities.)

11. How your application is assessed Applications successful at pre-sift will be evaluated on the quality of their technical project plan and the suitability of the business to receive an offer of a Defence Innovation Loan. There are two stages to this assessment and successful completion of stage one is required before progressing to stage 2.

11. 1 Assessment stage one The two parts of your application are assessed separately (the minimum requirements for both must be met to proceed to stage 2 assessment): The innovation application is assessed by DASA , to evaluate the quality of the project plan and the defence need for the innovation. The innovation loan request application undergoes an initial credit check by the Innovate UK Credit team.

Your DASA innovation application will be subject to the full DASA competition process as detailed on the competition process and assessment page , and assessed using the Defence Innovation Loans assessment criteria .

DASA reserves the right to disclose, on a confidential basis, any information it receives from you during the application and assessment period to any third party engaged by DASA for the specific purpose of evaluating or assisting DASA in the evaluation of your application. In providing such information you consent to such disclosure.

Appropriate confidentiality agreements (e.g. Non-Disclosure Agreements) will be put in place between DASA and the third party. 11. 2 Assessment stage two Innovate UK performs a full credit evaluation of the innovation loan request application to establish suitability for a Defence Innovation Loan.

Innovate UK’s Credit Team will assess the suitability of your business to receive the Defence Innovation Loan using the information provided in the business and financial questionnaire, including your financial spreadsheet submission. Innovate UK may need further information to be able to offer you a Defence Innovation Loan, at which point they may contact you.

Innovate UK as a responsible lender may decide against offering a Defence Innovation Loan if the information you provide does not make an adequate case for your company’s suitability and/or the affordability. Only applications meeting the requirements at stage one will progress to stage two.

If successful at stage two and a loan offer is made you will enter into a loan agreement and security agreement with Innovate UK Loans Ltd. Applications that are unsuccessful will receive feedback from DASA and Innovate UK, in the form of bullet points and a couple of short paragraphs after the Decision Conference. 11.

4 Resubmission to Innovate UK If at stage 1 assessment, an innovation application has been deemed to meet DASA ’s requirement of having a strong Defence need, but Innovate UK recommends a resubmission of the innovation loan request (for stage 1 assessment), DASA shall consider the innovation application fundable for 12 months from the date of the stage 1 decision release, to allow resubmission of the innovation loan request to Innovate UK within that time.

12. 1 Terms and conditions for innovation applications submitted to DASA Innovation applications submitted to DASA will undergo DASA assessment to evaluate the quality of the project plan and the defence need for the innovation. For the purpose of assessing the innovation applications, and the data we hold about you and your innovation, the following aspects of DASA terms and conditions will apply.

For your application to be accepted for assessment, you must tick a box to confirm your organisation’s unqualified acceptance of these and all DASA terms and conditions for this competition, as outlined in this competition document. DASA recognises the value of your intellectual property (IP).

We use a number of safeguards to protect the information you provide to us in your applications, whilst allowing proper scrutiny of your submissions by our expert assessors, facilitating effective collaboration, and achieving appropriate transparency of how public money is being spent. All information you provide to us as part of your application, that is not already available to us from other sources, will be handled in confidence.

This information will only be used for the purposes for which it is provided to us. It won’t be used for other purposes, without us having obtained the necessary rights and permissions to do so.

DASA reserves the right to disclose on a confidential basis any information it receives from you during the procurement process, which includes the full application, to any third party engaged by DASA for the specific purpose of evaluating or assisting DASA in the evaluation of your application. In providing such information you consent to such disclosure. Appropriate confidentiality agreements will be put in place.

As part of your application, you will be required to provide an application title, value proposition statement and a short abstract that you permit us to publish and use freely. We will keep the title; value proposition statement; abstract; total