Grant funding remains a valuable source of nondilutive finance for UK businesses developing innovative products, processes and services. However, the funding landscape has changed. Some longstanding programmes have been paused, while others, notably Horizon Europe, are now firmly re-established and open to UK applicants. For SMEs, scaleups and large companies, securing grant funding now requires a more targeted and strategic approach than in previous years.

Core UK grant routes for innovative businesses

Innovate UK (UKRI)

Innovate UK remains the primary gateway for UK innovation funding. Innovate UK paused Smart Grants in January 2025 with no open rounds in 2025/2026 while replacement funding models and pilots are developed. While Smart Grants are paused, Innovate UK continues to run a wide range of themed and challenge led competitions, many of which are open to SMEs, scaleups and large companies - often through collaboration. However, going forward these themed grants are likely to look for larger awards with fewer projects receiving funding each year.

Innovate UK funding can support feasibility studies, industrial research and experimental development, and prototyping, piloting and demonstration projects.

Funding levels vary by competition and company size, with large companies typically eligible for up to 50% of project costs. Most competitions encourage or require collaboration between SMEs, large companies, universities and research organisations.

Innovate UK competitions are published via the Innovation Funding Service and change frequently throughout the year.

Challenge led and sector specific UK funding

Beyond Innovate UK’s core competitions, significant funding is available through sector focused programmes, often backed by government departments or arm’s length bodies. Examples include:

• Advanced Propulsion Centre (APC) – automotive and transport technologies

• Aerospace Technology Institute (ATI) – aerospace R&D

• Defence and security grants (Dstl) – defence, cyber and national security innovation

• Clean energy and net zero programmes – hydrogen, batteries, renewables, heat networks

• Life sciences and health funding – including UKRI councils and charitable funders such as Wellcome

These programmes often welcome large company participation, particularly where projects demonstrate supply chain impact or collaboration with SMEs.

Grants beyond Innovate UK

Some funding sits outside Innovate UK, often with narrower eligibility but substantial value. This includes:

• Defence Science and Technology Laboratory (Dstl)

• DEFRA – environmental, agritech and sustainability innovation

• Wellcome Trust – health and life sciences

• Devolved nation grants – Scottish Enterprise, Innovate NI, Welsh Government

These schemes can be highly competitive and sector specific, making early eligibility assessment essential.

Horizon Europe (EU)

As of 1 January 2024, the UK is formally associated with Horizon Europe. This enables UK companies to engage in and lead consortia under the same conditions as EU member states, with funding provided directly by the European Commission. Horizon Europe is now one of the most significant opportunities for UK businesses seeking largescale R&D funding. It is open to SMEs, scaleups and large companies and has a strong focus on collaborative, cross border innovation.

Funding is available across clusters including:

• Digital, industry and space

• Health and life sciences

• Climate, energy and mobility

• Advanced manufacturing and AI

Horizon projects typically offer higher absolute funding values than UK only grants, but require consortium building, clear European impact and strong technical and commercial justification.

For businesses able to engage with international partners, Horizon Europe is now a core part of any serious innovation funding strategy.

Innovate UK Innovation Loans

Alongside grant funding, Innovate UK also offers Innovation Loans to support businesses undertaking late stage research and development with a clear route to commercialisation. Innovation Loans are particularly relevant for scaleups and larger SMEs that:

• Are beyond early feasibility or concept stages

• Have innovative technology approaching market readiness

• May struggle to access traditional bank finance due to technical or commercial risk

Unlike grants, Innovation Loans are repayable, but they are designed specifically for innovation led businesses and typically offer more favourable terms than commercial lending. Loans typically range from £100,000 up to £2 million and are available to UK registered SMEs, including scaleups. They offer competitive interest rates, tailored to innovation risk. Repayment profiles are aligned to project delivery and growth plans and here is no requirement to give up equity

Innovation Loans are assessed on both the technical strength of the innovation and the commercial viability of the business, meaning financial modelling and long term planning are critical to a successful application. Currently a majority of applicants fail the commercial viability testing, so this aspect of any submission needs to be reviewed carefully before an application is made.

Applying for grant funding — what matters now

Grant applications are increasingly assessed on:

• Strength of innovation and technical challenge

• Clear commercial route to market

• Strategic alignment with funder priorities

• Credible financial planning and delivery capability

For larger and more complex projects, particularly Horizon Europe, consortium design and partner roles are often as important as the technical idea itself.

How we can help

Grant funding is no longer about finding ‘an open competition’, it’s about building the right funding strategy.

We support SMEs, scaleups and large companies to:

• Identify appropriate UK and international grant opportunities

• Assess whether projects are realistically fundable

• Structure projects and collaborations to meet funder expectations

• Prepare and review high quality grant applications

• Support delivery, compliance and ongoing reporting

We also help businesses coordinate grant funding with R&D tax relief, ensuring incentives work together rather than against each other.