Defence Innovation Loans Cycle 5 | Accelerate defence commercialisation with flexible loans for UK SMEs

Defence Innovation Loans Round 5 - Application

Programme:Innovate UK

Awards:Up to £1m

Geographical Scope:national

Beneficiaries:private

Key Features:UK SMEs can access affordable loans to bridge the gap between proven defence innovation and commercial success, with expanded eligible costs that support pre commercial launch and market entry.

Key information at a glance

Programme owner: Defence and Security Accelerator, with Innovate UK Loans Ltd support
Funding type: Loan
Status: Open
Opens: 28 October 2025 at 16:00 (UK time)
Closes: 9 December 2025 at 12:00 (UK time)
Award size per project: £100,000 to £1,000,000 loan at 7.4 percent interest per annum
Funding coverage: Up to 100 percent of eligible project costs. No match funding required
Project maturity: TRL 6 and above suitable for near term commercialisation
Who can apply: Single UK registered SME. Large businesses, research organisations and academic institutions are not eligible to lead or apply
Focus: Commercialising mature defence innovations that can deliver UK economic benefit

What is new in Defence Innovation Loans Cycle 5

Expanded eligible costs mean you can now include:

Labour costs for staff undertaking pre commercial sales and marketing to exploit R&D results
Full costs of capital equipment used directly in exploitation of project results
Full costs of tooling and materials to develop demonstrations or inventory for customer validation
An element of working capital finance to support cashflow ahead of full profitability
Where Windsor Framework rules apply, applicants are restricted to capital usage and material costs for any pre commercial work. Check your position early and plan your budget accordingly.

Funding and award size - Defence Innovation Loans Cycle 5

Loan size: £100,000 to £1,000,000 per project
Interest rate: 7.4 percent per annum
Coverage: loans can fund up to 100 percent of eligible project costs. There is no match funding requirement
Security: loans are offered by Innovate UK Loans Ltd and typically require a debenture over the business. Affordability, security and risk are assessed during due diligence
Use of funds: strictly for R&D exploitation and commercial readiness activities that accelerate defence market entry in line with the competition rules

What assessors look for

Defence need and desirability: clear customer pull, use cases and end user sponsors
Feasibility and deliverability: credible plan, milestones and risk management to reach first sales
Viability and repayment: robust commercial model that supports loan affordability and on time repayment
Capability: leadership, financial control, facilities and partner readiness to deliver and scale
Value for money: efficient use of public lending to unlock UK economic benefit

Scope - Defence Innovation Loans Cycle 5

Defence Innovation Loans support UK SMEs to commercialise mature, defence relevant innovations. Cycle 5 places a sharper emphasis on activities that unlock sales and revenue by allowing a broader set of pre commercial and launch costs to be included in your budget. Typical projects will take a proven solution at TRL 6 or higher and fund the final push to market, such as compliance, demonstration inventory, first production capability, and go to market readiness for defence customers.

Eligibility - Defence Innovation Loans Cycle 5

Applicant: UK registered SME only, applying as a single company
Innovation stage: TRL 6 or higher, with realistic potential to be commercialised within the loan timeframe
Business suitability: you must evidence creditworthiness, leadership capability, and a robust plan to repay the loan from commercialisation
UK benefit: you must intend to exploit results in the UK or overseas in a way that positively impacts the UK economy or productivity
Ineligible applicants: individuals, academic institutions, research organisations and large companies are not eligible to apply for these loans

Deadlines and how to apply

Applications open: 28 October 2025 at 16:00
Applications close: 9 December 2025 at 12:00
You will complete two coordinated submissions: a defence innovation application through the DASA portal, and a business and financial questionnaire for Innovate UK Loans Ltd. Ensure both are complete and consistent. Build in time for financial modelling, security discussions, and internal approvals.

Benefits to applicants

Non dilutive growth finance aligned to R&D commercialisation rather than equity
Faster market entry through eligible spend on demonstrations, equipment, and go to market activity
Greater budget flexibility from Cycle 5’s expanded eligible costs
Improved investor confidence with a structured pathway to first revenues in defence

Grants Roadmapping, built for CFOs

Get a focused, funder-ready plan in 2 to 4 weeks. We benchmark your pipeline, map the best fit UK and EU calls to your technical and commercial milestones, and produce a clear bid calendar with go or no go decisions, owners, and dates. One team, one point of accountability. Global Reach. Local Expertise.

What you get

Portfolio scan and eligibility fit across Innovate UK, Horizon Europe, Eurostars
12 month call calendar, deadlines and funding rates, with quick scoring
Consortium gap analysis and partner shortlist
Bid plan with responsibilities, timeline, and compliance checks
Optional end to end writing, submission, and audit readiness

“A good roadmap removes the noise. CFOs get a realistic bid calendar, not false hope. We align funding to the business plan so teams move quickly and stay compliant.”
Dr. Chrysi Karagiannaki, R&D Tax Consultant, FI Group UK

Book a free 20 minute discovery call about Grants Roadmapping using the button below.

Book Discovery Call

Grants Roadmapping, built for CFOs

What you get

Portfolio scan and eligibility fit across Innovate UK, Horizon Europe, Eurostars
12 month call calendar, deadlines and funding rates, with quick scoring
Consortium gap analysis and partner shortlist
Bid plan with responsibilities, timeline, and compliance checks
Optional end to end writing, submission, and audit readiness

“A good roadmap removes the noise. CFOs get a realistic bid calendar, not false hope. We align funding to the business plan so teams move quickly and stay compliant.”
Dr. Chrysi Karagiannaki, R&D Tax Consultant, FI Group UK

Book a free 20 minute discovery call about Grants Roadmapping using the button below.

Book Discovery Call

FAQs - Defence Innovation Loans Cycle 5

Use this FAQ to quickly confirm award size, eligibility, collaboration rules, funding rates, match funding, eligible costs, timelines, UK benefit, and scoring expectations for the Defence Innovation Loans Cycle 5 competition.

Read Our 2025International Grants Guide

Trusted by InnovatorsAcross the UK

Discover how businesses like yours have benefited from our expertise in R&D tax credits and innovation funding.

Brad Hilder, Finance Director, Dronamics

What stood out was their proactive in-year review process. This approach has meant that we are now months ahead on our next claim, as the technical information has already been obtained during the year. This ensures our future claims are based on up-to-date and more reliable technical data, giving us even greater assurance.

Michelle Hennessy, Financial Controller, Stablepharma

We are extremely pleased with the R&D tax work carried out by FI Group on behalf of Stablepharma during 2024. Giuseppe and his team were great collaborators and quickly assimilated the necessary data to best showcase our R&D efforts, with excellent attention to detail. This resulted in a much-improved claim for our organisation, which will have an immediate impact on the work we can carry out in 2025. We would highly recommend them to other industry colleagues.

Praveen Sagar, Director and co-founder, OxDevice Ltd.

Giuseppe Amoroso from FI group did our R&D tax claim and successfully submitted on our behalf of OxDevice. Excellent team work in Submitting the claim.

Jenny Young, Head of Business Operations, Mocean

We've had an excellent experience collaborating with FI Group. Their team of consultants demonstrated proficiency in evaluating and comprehending our innovative wave energy technology, leading to a comprehensive technical report that played a significant role in securing our R&D tax credit repayment.

Robin Lumely-Savile, Director, BemOre

The smoothest way to work on R&D Tax Credit – not only are they experts of the subject but also sectors specialists; FI Group could get all the technical elements of our business by themselves leading to a successful and remarkable result.

Jaco Rabie, CFO, Equipsme

Service was fantastic, the claim exceeded our expectations and FI Group were very fair on contract points that I wanted to negotiate on. The original sale person followed the consultancy process throughout every stage to ensure the claim delivery met the expectations agreed from the beginning. We would highly recommend the services of FI Group.