Defence Innovation Loans open to UK SMEs

Image courtesy DASA

This service provides an opportunity for single small and medium-sized enterprises (SMEs) with solutions to Defence themed problems to apply for a Defence Innovation Loan of between £100,000 and £1 million with a below market interest rate of 7.4% per annum. 

This loan can be used to cover up to 100% of eligible project costs to aid the commercialisation of the solution.

Defence Innovation Loans were first introduced in June 2021 as a mechanism to help smaller organisations ‘build the business behind the innovation’.

Since then, eight companies have successfully secured a total of £6 million. Nearly all of these companies have gone on to secure further private investment worth a total of £16.9 million, creating 54 new jobs in defence innovation across the UK.

VRAI secured a Defence Innovation Loan to help commercialise their data capture and analysis technology. The technology, tested with the RAF, enabled trainers to assess and develop individualised training programmes for trainee pilots.

Niall Campion, Founder of VRAI said: “Without DASA funding it would have been impossible for us to bring this product into the UK defence supply chain.

"By providing working capital while we demonstrate the value of the product in the defence industry, the Defence Innovation Loan will help us grow our business and deliver measurable improvements to training across defence and other simulation markets.”

QUICKBLOCK, which develops lightweight, rapid assembly building blocks for force protection secured a Defence Innovation Loan, which amongst other things, has helped them to move their supplier base to Yorkshire, bolstering their supply chain and avoiding the recent shipping disruption in the Red Sea.

QUICKBLOCK CEO, Andrew Vincent said: “We are incredibly grateful for the support from DASA. The project rapidly accelerated the development of our product for the Defence market and allowed us access to end-users that we would otherwise not have had.”

Silicon Microgravity are using their Defence Innovation Loan to further develop their underground detection technology ready for trials in 2024. They are also using the money to help commercialise their product for security, border control, defence and civil engineering markets.

Francis Neill, CEO of Silicon Microgravity said: “DASA have been absolutely fundamental in helping to get Silicon Microgravity to the stage where we will shortly be commercialising what is becoming recognised as world-leading technology in gravity sensing and inertial navigation.”

Eligibility
To take on a Defence Innovation Loan for a project you must:

• be a UK registered SME
• intend to exploit the results in the UK or overseas to make a significant and positive impact on the UK economy and / or productivity
• give evidence that your business is suitable to take on a loan.

Only SMEs are eligible to apply for Defence Innovation Loans, individuals, academic institutions, research organisations and large companies are not eligible. Only single businesses can receive innovation loans, so joint applications with other organisations cannot be funded in this competition (subcontractors are allowed, see further details below). For more information on company sizes, please refer to the company accounts guidance (this is a change from the EU definition unless you are applying under State Aid).

Innovations must be fairly mature at TRL 6 and above to ensure that the solution can be commercialised within the time scale of the innovation loan. Applications must clearly evidence a Defence need for the innovative solution.

Open for applications
UK SMEs can apply now. The DIL FY25/26 Cycle 1 opened on 18th March and won’t close until 13th May, when Cycle 2 will open. To find the full schedule of cycles and dates head to this link.

For full details and to read through the comprehensive competition document, click here.