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What Is Business Innovation Funding?
Business innovation grants can help fund enterprises of all sizes who want to carry out research and development activities, such as feasibility studies or developing prototypes. As a general rule there are also a few loans available, particularly from industrial bodies and regional investment agencies to carry out sector specific research activities or boost a type of industry within a region, sometimes at an interest free rate.
A business innovation funding injection can help businesses carry out their research and development activities faster or undertake larger scale collaborative projects with a series of other UK-based and overseas partners, such as smaller and larger businesses and research partners from academic and industrial institutions. More often than not these business innovation grants and loans come from a Government source, a European source, an industrial body or in some cases local authorities who want sector specific developments in their area.
Some business innovation funding is open ended and can be used for research and development activities that match the specific objectives and goals of an individual business. Other business innovation funding will be for specifically defined sector requirements, such as innovation within the defence sector or for developing quantum technologies. When this sector specific grant project funding is defined, the grant provider will outline a project that it wants to pursue with industry specialists and then businesses are invited to apply solo or within a consortium or partnering with academics to meet the defined project goals using the funding available.
Who Are the Main Funding Providers?
Grant providers
In terms of national funding, the UK Government’s flagship innovation agency UK Research and Innovation (UKRI), alongside its sub-agencies the sector specific Research Councils and Innovate UK are responsible for organising a large portion of UK business innovation funding. There is also a Catapult Network provided by Innovate UK that supports businesses in transforming great ideas into valuable products and services by utilising a network of world-leading technology and innovation centres across different UK focused high tech sectors, such as semiconductors, cell and gene therapies and connected places. There is also funding available from the Defence and Security Accelerator for military applications and the UK Space Agency for high tech satellite and spaceship activities. The Scottish Enterprise, Welsh Government and Invest Northern Ireland also provide some country specific research and development funding for businesses looking to carry out innovative activities within their regions.
In terms of international funding, the UK has secured its association with the Horizon Europe programme, the European Union’s flagship research and innovation funding scheme. This means UK researchers and businesses are eligible to apply for a share of the €95.5 billion (£82 billion) budget allocated across work programmes for 2021-2027 dedicated to supporting cutting-edge research and innovation across all disciplines. As of the start of the Work Programme 2024, all calls are open to UK applicants through association.
For localised and regional funding, local authorities make up the bulk of grant providers for business innovation activity where they can identify specific needs for technical development and research activities for local businesses and communities, alongside feasibility studies. A large amount of this funding is allocated from the UK Shared Prosperity Fund which allows local authorities to provide funding for innovation activities across supporting local businesses, communities and place and people and skills activities.
Loan providers
In terms of loans available at a regional level, there is debt funding available for innovative activities from organisations such as Business Loans Scotland, Development Bank of Wales, The Highlands and Islands Enterprise and the FSE Group that has specific regional loan funds for research and development, including for Yorkshire, Greater London, Scotland, Thames Valley and the South East of England.
What Do You Get The Funds For?
Businesses may seek grants or loans to pay towards a range of different business innovation activities, which are briefly outlined below.
- Experimental Development – Funding to acquire, combine, shape or use existing scientific and technical knowledge to develop new or create improved products, processes and services.
- Project Feasibility and Evaluation – Funding to Evaluate and analyse a project’s potential to determine if research or product and service development is viable to continue on a wider basis.
- Industrial Research – Funding for planned research and critical investigation to gain new knowledge and skills for the purpose of product development or service or process improvement.
- Technical Evaluation – Funding to carry out tests to determine and investigate technical suitability of materials, equipment, system or processes.
- Technical Feasibility – Funding to carry out in-depth studies to assess the details of how you intend to deliver a product or service to customers.
What Grants Are On Offer?
Here are some examples of grant funding types available:
- Proof of Concept Grants – Funding that allows a business to develop a prototype or other intellectual property (IP) type and take it to development to prove that it can be a commercially viable idea, rather than just an idea that sounds good on paper.
- Innovation Vouchers – Vouchers that have a fixed value that can be redeemed for innovation support with an academic or other technical expertise partner to help further boost a business innovation project.
- New Innovators Grant – An entry level scheme that encourages businesses that are new to carrying out innovation projects within a particular defined sector for each grant to give them a financial boost to carry out research and development activities successfully in their industry.
- Design Grants – Funding available for creative sectors to help develop a functional design for a new commercial business concept with an end goal to take a product to market.
- Digital Grants – Funding to take a concept for a specified sector and exploit the benefits of going digital with the project flow on an innovative product or service, this can include harnessing AI or cloud computing to meet a solution.
- Call For Proposal Grants – This is funding provided by a specific Government or Industry support body where they seek proposals for novel solutions to meet a specific innovative industry need, either by individual businesses or those in a collaboration with other businesses or research and academic partners. Funding is provided to proposals that have a close match to what is being looked for.
- Accelerator Grants – Businesses are invited to apply for a place on a sector specific accelerator where they can get support for growing their innovative project in an environment that fosters research and development over a fixed time period. These come with access to enhanced support from industry experts, high tech equipment and research labs. A financial reward is also offered to successful applicants.
How Much Funding For Project Costs Is Typically Available?
Every single scheme is different, for some start-up innovation grants it is possible to get up to 100% of the project costs covered. Other higher costing projects can see businesses expected to provide a contribution of funding from other sources, ranging from 30% of costs covered by the grant up to 90% of the project costs covered. In many cases this is to ensure that the grant applicant is financially solvent and serious about completion of the project and willing to take on some of the financial risk themselves. It also means that by receiving partial/matched funding, a developer might be able to take on a higher cost project than they would have done without the grant.
From the current set of grants available in the UK for business innovation, a total amount awarded as a grant ranges from under £1,000 for an individual small innovation feasibility project, up to £1 million for a large-scale collaborative national or international innovation project.
Who can apply?
Sole trading business owners and start-ups, up through small to medium sized businesses and large corporations are all eligible to apply for innovation funding grants and loans, where funding is fully scalable based on project size. Each project will have a specific criteria in their ‘How to Apply’ section on what is the ideal applicant profile.
How do you apply?
Most innovation grants tend to have an online application process or a downloadable form that can be submitted to the provider. More often than not they come with a detailed questionnaire about the nature of an innovation project and applicant to be filled out as an initial feasibility check. It means it can help both businesses themselves and the fund provider determine whether or not the innovation project in question qualifies for the funding being provided. This qualification check ensures that neither party spends too much time on the funding process for a project that will not be a fit at all.
Prospective applicants can compare different funding provider options and filter based on their own needs by reading details of what each scheme will fund, what geographic location is covered and the eligibility criteria to apply.
Once both an applicant and funding provider are satisfied that their needs match up, then a more formal application process is issued and the usual financial due diligence checks are carried out and funding is either awarded or a decision not to fund comes with an explanation, so that businesses can take on board feedback against future applications.
Due to the highly experimental nature of cutting edge concepts, innovation funding providers are more likely to take more risks when awarding funding, but still want to award funding to applications that are most likely to succeed. If businesses have been informed that the type of work they are doing is relevant to the innovation funding in question, they may seek to get collaborative partners (a consortium), in order to increase the strength of their funding bid and boost the project’s chances of success. Seeking similar industry partners who are also looking for funding, or bringing on board established research and academic experts in a sector, can help build a very strong case for an innovative project being awarded funding.
When do you apply?
In most cases of funding applications for business innovation there is usually a deadline that businesses must adhere to so that limited funding can be processed and applicants can then be considered to be awarded funding. Those who apply after the cut off point will not be considered for funding.
There are also business innovation funding pots that have been made available to jump start and enhance key tech and scientific sectors in the UK on a longer term basis and that means that these funds stay open far longer than others, in many cases for years. This means that applications can be made for this type of funding on an ongoing basis, as long as the fund states it is open for applications.
When it comes to the actual stage in the business innovation project process for a business, you would typically apply for the funding before any research and development work has taken place. The reason for this is because most funding providers will only pay for work completed that has been approved by them and not work that has already been completed and may not meet their cost criteria or list of approved items or ideas that can be paid for using funding.
Want the Full Set of Business Innovation Funding Schemes?
If you want the full set of Business Innovation Grants available, you can use our Grants Matcher, or if you want to save yourself the time and effort then tell us about your project funding needs and let us do the work for you.
