Evaluation of Innovation Loans – Interim Report to Innovate UK
Client: Innovate UK
In the 2015 Spending Review it was announced that the UK Government would introduce new innovation finance products to support innovation. Innovate UK worked with the Department for Business, Energy and Industrial Strategy (BEIS) and other partners to develop a new repayable finance product – innovation loans – with the combined objective of bridging the funding gap for innovative businesses whilst also providing value for money for the taxpayer.
Government funded loans for innovation are new to the UK and therefore Innovate UK is running a pilot programme over two years. A total of up to £50 million is available for business innovation projects, with SMEs able to borrow between £100,000 and £1 million. The pilot programme commenced in late 2017 and was extended with £25m additional funding in 2019. Innovation loans are for SMEs that want to scale up by developing new or improved products, processes or services through late-stage research and development projects that have a clear route to commercialisation. The pilot received 393 applications seeking £200m in funding. By August 2019, 69 loan agreements had been signed.
Innovate UK commissioned SQW (supported by BMG Research and Middlesex University) to undertake an interim evaluation of the innovation loans pilot programme. The overall objective was to assess the delivery of innovation loans and make an early assessment of progress towards intended outputs and outcomes. The evaluation drew on evidence from telephone interviews with: 38 businesses (including ten as case studies) that received an innovation loan; 78 unsuccessful businesses; and representatives from Innovate UK and other intermediary organisations.
At this interim stage, the report concluded that the innovation loans pilot was very successful. In delivery, Innovate UK has built up good relationships and the support is highly valued by businesses. Most businesses interviewed indicated that they could not get funding for innovation, from other sources and that the loans had accelerated and/or scaled up projects in a way that would not have been possible otherwise. The loans were also important in helping businesses to secure a significant amount of follow-on funding, increase R&D investment and create high value research jobs.
SQW's Interim Report to Innovate UK can be found here.