Defence Innovation Loan/26 Cycle 5
Offers United Kingdom defence innovation teams a government-backed low interest loan route through an official loan programme.
The Defence Innovation Loan programme is a repayable financing mechanism jointly delivered by UK Defence Innovation (UKDI, formerly DASA) and Innovate UK Loans Ltd, designed to help UK small and medium-sized enterprises bring mature defence technologies to commercial scale. Unlike DASA's grant competitions, the loan instrument is intended for innovations that have already cleared proof-of-concept and require capital to bridge the gap between late-stage development and market entry. The programme represents a deliberate policy choice to use repayable finance — rather than grants — for innovations at TRL 6 and above, where commercial viability is demonstrable and the risk profile is closer to that of a commercial lender.
Loans range from £100,000 to £1 million per project and are structured in two phases: a project period of up to five years during which only interest is due (at 3.7% per annum), followed by a repayment period of up to five years at 7.4% per annum — a rate described as below market for comparable risk. The loan can cover up to 100% of eligible project costs. Eligible applicants are UK-registered SMEs with innovations at TRL 6 or above in the defence or dual-use technology space and a credible intent to commercialise within the loan term. Application is a two-part process: an innovation assessment through UKDI's Online Submission Service and a credit evaluation through Innovate UK's portal; both submissions are required simultaneously.
As of mid-2026, the programme is paused while UKDI develops an improved service — the most recent completed cycle (FY26/27 Cycle 1) closed 14 April 2026. When active, cycles open roughly every six to eight weeks on a rolling annual cadence. Applicants should monitor the UKDI website for the announcement of the new service. The programme is well-suited to defence-facing technology companies that have completed early development funding (such as a DASA grant) and need structured financing to support commercialisation rather than additional grant subsidy.
Below-market repayable loans of £100K–£1M for UK SMEs with defence or dual-use innovations at TRL 6 or above seeking to bridge late-stage development to commercial deployment.
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