Defence Innovation Loans/27 — Next
Funds companies with strong defense applications through development loans and advisory support for advanced innovation.
Defence Innovation Loans are below-market concessional loans delivered jointly by UK Defence Innovation (UKDI) and Innovate UK Loans Ltd for UK SMEs commercialising mature defence innovations. The loan instrument charges 3.7% per annum during the project period (no capital repayments) and 7.4% per annum during the subsequent repayment period, covering up to 100% of eligible project costs. Individual loans range from £100,000 to £1 million, with a maximum overall loan term of seven years (up to five years project period, up to five years repayment). FY26/27 Cycle 1 ran from 24 March to 14 April 2026 and is now closed. As of May 2026, UKDI has paused the programme while developing a new improved service, with resumption expected in connection with UKDI Full Operating Capability in July 2026.
Eligibility is restricted to UK-registered SMEs operating at TRL 6 or above with a credible plan to commercialise their defence innovation within the loan term. Universities, research organisations, non-profits, and sole traders are ineligible. Applicants must demonstrate intent to exploit results in the UK or overseas with positive UK economic impact and must be capable of servicing a loan commitment. FY25/26 ran seven cycles, signalling a regular cadence of roughly one cycle every six to eight weeks when the programme is active.
The application process is two-part and must be submitted simultaneously: an innovation assessment via the UKDI Online Submission Service (evaluating desirability, feasibility, and viability) and an Innovation Loan Request via the Innovate UK submission portal (covering credit evaluation). A Decision Conference combines both assessments. Applicants who have already developed their defence solution to TRL 6 and can articulate a clear commercialisation pathway — including revenue model, routes to market, and financial projections — are best positioned. Organisations should monitor the UKDI mailing list and gov.uk for announcement of the next cycle opening date.
Any innovation at TRL 6 or above with a strong defence application, targeting commercialisation within the loan period, open to UK SMEs across all relevant technology domains.
Sign up free to see the funding breakdown
Sign up free to see the industries in scope
Sign up free to see the full eligibility
Sign up free to see how to apply
Sign up free to see what you submit
Sign up free to see the timeline
Sign up free to see where teams trip up