UK Government asks British Business Bank to explore using existing financial guarantee capacity to support IP finance

Photo by Alicja Ziajowska on Unsplash

The UK Government will be asking the British Business Bank to explore using its existing financial guarantee capacity specifically to support IP-backed lending, as politicians and regulators increasingly recognise the challenge faced by IP-rich scaleups in sourcing funding without ‘traditional’ tangible assets.

The commitment comes in the government’s response to the small business access to finance call for evidence launched by the Department for Business and Trade (DBT) in March 2025. The response document, published Thursday, 04/12/25 by HM Treasury and the Department for Business and Trade (DBT), says:

“In light of feedback on lending against intangible assets, the government is working closely with industry, financial institutions, and regulators on how best to support lending to innovative and high-growth intellectual property-rich (IP) SMEs. This autumn, a newly established cross-government working group and the Intellectual Property Office’s (IPO) industry IP Finance Advisory Group have been exploring measures to improve lending. As set out in the Entrepreneurship Prospectus published alongside the November 2025 Budget, the government has asked the British Business Bank to explore using its existing financial guarantee capacity to support IP -backed lending specifically.”

At the same time, the response document also includes a commitment “to upgrading the British Business Bank’s information service, the Finance Hub, with easier to navigate advice to improve finance readiness in SMEs and drive demand. The British Business Bank Finance Finder Tool is now embedded in the Business.gov.uk triage, with users being signposted to it via the curated personalised user guide.”

The recognition of the growing importance of IP and intangible assets to high-tech and other high growth scaleup companies is apparent in the enquiry response document. In it, the authors state:

“As part of the call for evidence, we sought to understand the barriers to borrowing to finance intangible investments and the experience of businesses seeking to use intangible assets as collateral for borrowing.”

“Some business and finance respondents noted that despite the growing economic importance of intangible investments, mainstream lending practices are typically unable to account for the value of IP as collateral, such as copyright, patents or trademarks, when making their lending decisions. Lending against IP tends to be a specialist activity. Information asymmetries contribute to smaller intangible-intensive businesses finding it harder and more costly to borrow than businesses with a sufficient pool of tangible assets.”

The response observes:

“Some finance respondents noted that lending against IP value is challenging due to:

• capital requirements (notably under the standardised approach)

• a lack of secondary markets for IP

• valuation difficulties”

The Entrepreneurship document referenced above has this to say on IP lending:

“Equity finance isn’t the only game in town for scaling firms. Debt finance is an important complementary funding source and potential alternative for entrepreneurs as they scale their businesses. The British Business Bank has played a key role in supporting the development of debt funding options, committing £1.1 billion since 2013 through their Debt Funds programme which has supported the creation of new and larger debt funds, over 1,400 additional jobs and strong returns for the taxpayers… To further support the provision of debt funding to the wave of new innovative businesses that lack physical assets, the government has asked the Bank to explore using its existing financial guarantee capacity to support IP-backed lending.”