The UK’s Defence and Security Accelerator (DASA) has launched the fifth cycle of its Defence Innovation Loans programme, offering enhanced financial support to small and medium-sized enterprises (SMEs) seeking to commercialise defence technologies. This initiative, backed by Innovate UK, provides loans ranging from £100,000 to £1 million at a competitive interest rate of 7.4% per annum, specifically targeting technologies at Technology Readiness Level (TRL) 6 and above.
Cycle 5 introduces expanded eligible costs, a strategic move designed to bridge the gap between product development and commercial success. For the first time, the programme will cover labour costs associated with pre-commercial sales and marketing, capital equipment, tooling and materials for demonstrations, and working capital to support cash flow. This expansion reflects a deeper understanding of the financial challenges SMEs face when transitioning from research and development to full-scale commercialisation.
Since its inception in 2021, the Defence Innovation Loans programme has disbursed £9.9 million to 11 companies, leveraging an additional £28.9 million in private investment and creating 137 new jobs. Success stories like Sentinel Photonics and Oxford Space Systems demonstrate the programme’s impact. Sentinel Photonics, which developed a novel laser detection system, used the loan to expand its team and scale operations, while Oxford Space Systems leveraged funding to advance its deployable antenna technology to space launch readiness.
The programme’s emphasis on mature technologies ensures that investments are directed towards solutions with clear commercial potential. By offering below-market interest rates and flexible repayment terms, DASA aims to reduce financial barriers for SMEs, fostering innovation in the defence sector.
“This is about more than just funding—it’s about building a sustainable ecosystem for defence innovation,” said a spokesperson for DASA. “By supporting SMEs at this critical stage, we’re ensuring that cutting-edge technologies reach the market, strengthening the UK’s defence capabilities and economic competitiveness.”
The application window for Cycle 5 opens on 28 October 2025 and closes on 9 December 2025. Interested SMEs are encouraged to review the competition document for detailed eligibility criteria and application guidelines. With this latest iteration, DASA reaffirms its commitment to nurturing innovation and driving forward the UK’s defence technology sector.