Defence Innovation Loans

Defence Innovation Loans

Provides United Kingdom Defence Innovation Loans financing for mature defence solutions needing capital before full commercialization.

Defence Innovation Loans is a repayable below-market-rate loan programme for UK SMEs with mature defence innovations seeking capital to reach commercialisation. The programme is co-delivered by UK Defence Innovation (UKDI, formerly DASA, which became part of UKDI in February 2026) and Innovate UK Loans Ltd, which handles credit evaluation and loan administration. Loan amounts range from £100,000 to £1 million, covering up to 100% of eligible project costs.

Applicants must be UK-registered SMEs with defence innovations at Technology Readiness Level 6 or above and must demonstrate a credible intent to commercially exploit results in the UK or overseas with positive UK economic impact. Interest rates are 3.7% per annum during the project period (no capital repayments required) and 7.4% per annum during the subsequent repayment period, both described as below-market. The maximum project period is 5 years, the maximum repayment period is 5 years, and the overall loan term is capped at 7 years. No sector-specific sub-focus is mandated beyond the broad defence and security requirement.

Applications require two parallel submissions: a full innovation assessment via the UKDI Online Submission Service (Part A), and a credit application via the Innovate UK submission portal (Part B); both are evaluated at a combined Decision Conference. As of May 2026, the programme is paused while UKDI develops a new improved service. The most recent cycle (FY26/27 Cycle 1) closed 14 April 2026; prior cycles ran approximately monthly throughout FY25/26. Companies interested during the pause are directed to contact a local UKDI Innovation Partner.