Funding Focus: Grant funding landscape for 2026

The government’s Modern Industrial Strategy identifies eight high-growth sectors (IS-8) prioritised for government support, including funding, skills initiatives and efforts to optimise regulation. The sectors include ‘frontier industries’: forward-looking technologies and services that sit at the leading edge of their broader sectors. These include advanced manufacturing, clean energies, life sciences, defence and digital and technology businesses.

Businesses, particularly SMEs, that fall into these sectors and industries, are likely to have opportunities to apply for grant funding. When applying, it’s important to remember the fundamentals:

• A grant contract needs to be secured before a project commences.
• A grant opportunity may be lost if any financial or contractual commitment to the project is made prior to application.
• Cash grants are typically paid in arrears.
• Grants are frequently claimed quarterly and subject to audit.
• For capital intensive projects, the grant may be subject to additional value-for-money measures.
• Grants are typically based around periodic funding rounds.

It’s also important to steer clear of common pitfalls, such as focusing on misaligned opportunities or not elaborating on the direct short-term impact of the project as well as its long-term potential.

Grant funding windows often open as part of a larger fund that has multiple funding rounds. The Life Sciences Innovative Manufacturing Fund, DRIVE 35 and ATI are examples of this. If you miss one window, another is likely to open again soon and preparatory work can be done in the interim. Remember that the better prepared you are to pull together an application when a window opens, the quicker and more seamless the process will be.

Innovation Loans

While a business might secure a grant at the early stages of the R&D development, it may need additional funding to bridge the funding gap and take their late-stage R&D all the way to   commercialisation. Innovation Loans often provide a viable alternative to commercial loans, by offering SMEs flexible and patient capital over a seven-year term. They are available in loan sizes from £100k to £5 million and cover up to 100% ​of eligible project costs (including ​pre-commercial ​costs).

The scheme is administered by Innovate UK and available in regular funding rounds. All applicants must be able to demonstrate a distinctive, near-to-market solution; clear commercial potential; credible forecasts and covenant compliance; a team with the right experience to deliver; and a structured plan that includes timelines, milestones and risk management. Additionally, the business must be able to demonstrate a strong fit with IS-8.

Framework for combining incentives and reliefs

For all proactive businesses, it’s important to consider grant funding in the context of a wider innovation funding strategy. Different reliefs and incentives come into play during the innovation lifecycle. This makes it vital to pull together a roadmap that sequences incentives across the journey from feasibility to commercialisation.

Start by planning funding windows proactively and building timelines around competition cycles, claim deadlines and expected cashflow injection points. As a guide, companies should consider the following framework, matching the incentive to the activity:

• R&D tax relief ® reimburses past spend​
• Grants ® de-risk early and mid-stage innovation​
• Innovation loans ® fund late-stage development and scale-up​
• Other incentives (e.g. Patent Box) ® reduce Corporation Tax

Adopting this holistic approach will ensure that you unlock opportunity to support your future growth in a co-ordinated way.

How ForrestBrown can support you

ForrestBrown’s experienced grants team can support businesses across all aspects of grant funding applications. This includes eligibility assessment, application support, project management and due diligence, financial modelling and offer letter review.

For businesses that have prepared an application themselves, we can also assist with pre-submission application review. 

To discuss funding opportunities with Karim, please contact [email protected]

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