Unlocking the Value of Intellectual Property: Why Banks Are Finally Lending to IP-rich SMEs and scaleups
5 Feb 2026
Watch the full IP Goldmine podcast episode with James Andrews here: Inngot - Risk and Governance in IP Lending
Intellectual property (IP) is finally taking its rightful place as a critical asset class that can now be used by companies seeking debt funding from banks.
The Historical Challenges of IP Lending to SMEs and scaleups
In the past, banks have faced significant hurdles when it comes to lending against intellectual property, particularly to smaller companies. While enterprise level companies and large businesses have a long-track record of borrowing using their IP as collateral – dating back to the 19th century – the challenge for SMEs and scaleups was to demonstrate the value their IP and intangibles are actually delivering to the company.
The problem stemmed from two areas really. Unfamiliarity with IP as an asset class, and banking regulations, which encourage lenders to avoid it.
On the first point, even now, the training bankers go through includes the advice that they should ignore a company’s IP in any lending discussions as “too difficult.” In part, that’s because traditional accounting rules make home-grown IP and intangible largely invisible on the balance sheet. If they do appear, it’s as a sunk cost.
Only when a company buys IP is its value fixed – and even then, the buyer is required to put the acquisition cost on its balance sheet, and then amortise it (reduce the original value) every year until it supposedly reaches zero.
So, banks traditionally have simply not understood IP as an asset class, and have tended to focus on tangible assets instead, which historically have been much easier to get their heads round.
There are also issues of ‘due diligence,’ mainly around IP valuations. These haven’t been problematical for bigger IP-backed funding deals, because the companies involved will usually be able to afford highly complex, expensive and time-consuming valuations of their IP and intangibles, and perhaps also premiums to insure the IP being offered as collateral against any fall in value. Plus, the big accountancy and consultancy firms they use for these valuations will have multi-million-pound insurance of their own, just in case they make a mistake…
Added to that, is the second issue: that banking regulations favour tangible assets, and, at present, downgrade intangibles. Tangibles assets taken as collateral for lending can be used to offset capital requirements – the rules that say banks have to have a certain amount of capital available. But loans secured against tangible assets can’t be used to offset capital requirements.
So, these two factors have traditionally meant banks have been hesitant to embrace IP.
What’s changed in the use of IP as collateral?
Companies, particularly younger, technology-heavy ones, just don’t need tangible assets in the same way that the giants of the last century did. That means there is a shrinking supply of tangible assets for banks to take as security. With this decline in tangible assets on company balance sheets, banks are now compelled to explore alternative collateral, like IP and intangibles.
As a lender, if you can't get your hands on the kinds of tangible assets you are used to taking as collateral, then you really have to start looking more broadly at other things of value. And that’s where IP as an asset class is now becoming ever more important.
Misconceptions About IP
One of the biggest misconceptions surrounding IP is the belief that it is riskier than tangible assets. This simply isn’t true: well-managed IP can appreciate in value, making it a more reliable form of security. Inngot works with NatWest on its High Growth IP-backed loan (we helped them develop it, and we provide the IP valuations that support it). As part of the loan agreements, borrowers have to have the IP used as collateral revalued every year the loan runs for.
NatWest has just said that on average, IP taken as collateral has increased in value by 32% year on year. This figure highlights the potential of IP to be a strong security option for lenders.
What Makes IP Bankable?
For IP to be considered bankable, it must be revenue-generating. This means that the IP should be connected to cash flows that can service any potential loans. Lenders are now more aware of the scalability of IP and its direct correlation with a company’s growth potential.
If the business is generating revenue from the intellectual property assets, then it has customers who are willing to pay for the goods or services supported by this IP.
Legal and Market Developments
Recent legal advancements have also paved the way for IP financing. Changes in the laws governing what assets can be taken as security in a range of countries have made it easier for borrowers to get IP-backed loans, because it has made it easier for lenders to take security over relevant, cash generating, IP. The most obvious example of a country which has changed its laws to allow IP-backed finance is Scotland, where the Moveable Transactions Act can into force on April 1st, 2025.
As a result, NatWest is now launching a Scottish version of its High Growth IP backed loan; previously, this loan was only available in England and Wales.
Assessing IP Value
So, how do lenders assess IP today? There are several key factors: the separability of the IP assets from the business (can they easily be sold?), their saleability (would anyone want to buy them?), and their material value (what would they be worth if they had to be sold?). Lenders are increasingly looking for evidence of market traction and customer willingness to pay.
Where we are today
To conclude, the landscape of IP finance is transforming, with banks starting to recognise the value of intellectual property as a bankable asset. This shift is driven by a combination of market necessity, evolving perceptions, and legal developments. As companies continue to leverage their IP for growth, understanding how to navigate the lending landscape will be crucial for success.
Watch the full IP Goldmine podcast episode with James Andrews here: Inngot - Risk and Governance in IP Lending
Intellectual property (IP) is finally taking its rightful place as a critical asset class that can now be used by companies seeking debt funding from banks.
The Historical Challenges of IP Lending to SMEs and scaleups
In the past, banks have faced significant hurdles when it comes to lending against intellectual property, particularly to smaller companies. While enterprise level companies and large businesses have a long-track record of borrowing using their IP as collateral – dating back to the 19th century – the challenge for SMEs and scaleups was to demonstrate the value their IP and intangibles are actually delivering to the company.
The problem stemmed from two areas really. Unfamiliarity with IP as an asset class, and banking regulations, which encourage lenders to avoid it.
On the first point, even now, the training bankers go through includes the advice that they should ignore a company’s IP in any lending discussions as “too difficult.” In part, that’s because traditional accounting rules make home-grown IP and intangible largely invisible on the balance sheet. If they do appear, it’s as a sunk cost.
Only when a company buys IP is its value fixed – and even then, the buyer is required to put the acquisition cost on its balance sheet, and then amortise it (reduce the original value) every year until it supposedly reaches zero.
So, banks traditionally have simply not understood IP as an asset class, and have tended to focus on tangible assets instead, which historically have been much easier to get their heads round.
There are also issues of ‘due diligence,’ mainly around IP valuations. These haven’t been problematical for bigger IP-backed funding deals, because the companies involved will usually be able to afford highly complex, expensive and time-consuming valuations of their IP and intangibles, and perhaps also premiums to insure the IP being offered as collateral against any fall in value. Plus, the big accountancy and consultancy firms they use for these valuations will have multi-million-pound insurance of their own, just in case they make a mistake…
Added to that, is the second issue: that banking regulations favour tangible assets, and, at present, downgrade intangibles. Tangibles assets taken as collateral for lending can be used to offset capital requirements – the rules that say banks have to have a certain amount of capital available. But loans secured against tangible assets can’t be used to offset capital requirements.
So, these two factors have traditionally meant banks have been hesitant to embrace IP.
What’s changed in the use of IP as collateral?
Companies, particularly younger, technology-heavy ones, just don’t need tangible assets in the same way that the giants of the last century did. That means there is a shrinking supply of tangible assets for banks to take as security. With this decline in tangible assets on company balance sheets, banks are now compelled to explore alternative collateral, like IP and intangibles.
As a lender, if you can't get your hands on the kinds of tangible assets you are used to taking as collateral, then you really have to start looking more broadly at other things of value. And that’s where IP as an asset class is now becoming ever more important.
Misconceptions About IP
One of the biggest misconceptions surrounding IP is the belief that it is riskier than tangible assets. This simply isn’t true: well-managed IP can appreciate in value, making it a more reliable form of security. Inngot works with NatWest on its High Growth IP-backed loan (we helped them develop it, and we provide the IP valuations that support it). As part of the loan agreements, borrowers have to have the IP used as collateral revalued every year the loan runs for.
NatWest has just said that on average, IP taken as collateral has increased in value by 32% year on year. This figure highlights the potential of IP to be a strong security option for lenders.
What Makes IP Bankable?
For IP to be considered bankable, it must be revenue-generating. This means that the IP should be connected to cash flows that can service any potential loans. Lenders are now more aware of the scalability of IP and its direct correlation with a company’s growth potential.
If the business is generating revenue from the intellectual property assets, then it has customers who are willing to pay for the goods or services supported by this IP.
Legal and Market Developments
Recent legal advancements have also paved the way for IP financing. Changes in the laws governing what assets can be taken as security in a range of countries have made it easier for borrowers to get IP-backed loans, because it has made it easier for lenders to take security over relevant, cash generating, IP. The most obvious example of a country which has changed its laws to allow IP-backed finance is Scotland, where the Moveable Transactions Act can into force on April 1st, 2025.
As a result, NatWest is now launching a Scottish version of its High Growth IP backed loan; previously, this loan was only available in England and Wales.
Assessing IP Value
So, how do lenders assess IP today? There are several key factors: the separability of the IP assets from the business (can they easily be sold?), their saleability (would anyone want to buy them?), and their material value (what would they be worth if they had to be sold?). Lenders are increasingly looking for evidence of market traction and customer willingness to pay.
Where we are today
To conclude, the landscape of IP finance is transforming, with banks starting to recognise the value of intellectual property as a bankable asset. This shift is driven by a combination of market necessity, evolving perceptions, and legal developments. As companies continue to leverage their IP for growth, understanding how to navigate the lending landscape will be crucial for success.
Watch the full IP Goldmine podcast episode with James Andrews here: Inngot - Risk and Governance in IP Lending
Intellectual property (IP) is finally taking its rightful place as a critical asset class that can now be used by companies seeking debt funding from banks.
The Historical Challenges of IP Lending to SMEs and scaleups
In the past, banks have faced significant hurdles when it comes to lending against intellectual property, particularly to smaller companies. While enterprise level companies and large businesses have a long-track record of borrowing using their IP as collateral – dating back to the 19th century – the challenge for SMEs and scaleups was to demonstrate the value their IP and intangibles are actually delivering to the company.
The problem stemmed from two areas really. Unfamiliarity with IP as an asset class, and banking regulations, which encourage lenders to avoid it.
On the first point, even now, the training bankers go through includes the advice that they should ignore a company’s IP in any lending discussions as “too difficult.” In part, that’s because traditional accounting rules make home-grown IP and intangible largely invisible on the balance sheet. If they do appear, it’s as a sunk cost.
Only when a company buys IP is its value fixed – and even then, the buyer is required to put the acquisition cost on its balance sheet, and then amortise it (reduce the original value) every year until it supposedly reaches zero.
So, banks traditionally have simply not understood IP as an asset class, and have tended to focus on tangible assets instead, which historically have been much easier to get their heads round.
There are also issues of ‘due diligence,’ mainly around IP valuations. These haven’t been problematical for bigger IP-backed funding deals, because the companies involved will usually be able to afford highly complex, expensive and time-consuming valuations of their IP and intangibles, and perhaps also premiums to insure the IP being offered as collateral against any fall in value. Plus, the big accountancy and consultancy firms they use for these valuations will have multi-million-pound insurance of their own, just in case they make a mistake…
Added to that, is the second issue: that banking regulations favour tangible assets, and, at present, downgrade intangibles. Tangibles assets taken as collateral for lending can be used to offset capital requirements – the rules that say banks have to have a certain amount of capital available. But loans secured against tangible assets can’t be used to offset capital requirements.
So, these two factors have traditionally meant banks have been hesitant to embrace IP.
What’s changed in the use of IP as collateral?
Companies, particularly younger, technology-heavy ones, just don’t need tangible assets in the same way that the giants of the last century did. That means there is a shrinking supply of tangible assets for banks to take as security. With this decline in tangible assets on company balance sheets, banks are now compelled to explore alternative collateral, like IP and intangibles.
As a lender, if you can't get your hands on the kinds of tangible assets you are used to taking as collateral, then you really have to start looking more broadly at other things of value. And that’s where IP as an asset class is now becoming ever more important.
Misconceptions About IP
One of the biggest misconceptions surrounding IP is the belief that it is riskier than tangible assets. This simply isn’t true: well-managed IP can appreciate in value, making it a more reliable form of security. Inngot works with NatWest on its High Growth IP-backed loan (we helped them develop it, and we provide the IP valuations that support it). As part of the loan agreements, borrowers have to have the IP used as collateral revalued every year the loan runs for.
NatWest has just said that on average, IP taken as collateral has increased in value by 32% year on year. This figure highlights the potential of IP to be a strong security option for lenders.
What Makes IP Bankable?
For IP to be considered bankable, it must be revenue-generating. This means that the IP should be connected to cash flows that can service any potential loans. Lenders are now more aware of the scalability of IP and its direct correlation with a company’s growth potential.
If the business is generating revenue from the intellectual property assets, then it has customers who are willing to pay for the goods or services supported by this IP.
Legal and Market Developments
Recent legal advancements have also paved the way for IP financing. Changes in the laws governing what assets can be taken as security in a range of countries have made it easier for borrowers to get IP-backed loans, because it has made it easier for lenders to take security over relevant, cash generating, IP. The most obvious example of a country which has changed its laws to allow IP-backed finance is Scotland, where the Moveable Transactions Act can into force on April 1st, 2025.
As a result, NatWest is now launching a Scottish version of its High Growth IP backed loan; previously, this loan was only available in England and Wales.
Assessing IP Value
So, how do lenders assess IP today? There are several key factors: the separability of the IP assets from the business (can they easily be sold?), their saleability (would anyone want to buy them?), and their material value (what would they be worth if they had to be sold?). Lenders are increasingly looking for evidence of market traction and customer willingness to pay.
Where we are today
To conclude, the landscape of IP finance is transforming, with banks starting to recognise the value of intellectual property as a bankable asset. This shift is driven by a combination of market necessity, evolving perceptions, and legal developments. As companies continue to leverage their IP for growth, understanding how to navigate the lending landscape will be crucial for success.
Watch the full IP Goldmine podcast episode with James Andrews here: Inngot - Risk and Governance in IP Lending
Intellectual property (IP) is finally taking its rightful place as a critical asset class that can now be used by companies seeking debt funding from banks.
The Historical Challenges of IP Lending to SMEs and scaleups
In the past, banks have faced significant hurdles when it comes to lending against intellectual property, particularly to smaller companies. While enterprise level companies and large businesses have a long-track record of borrowing using their IP as collateral – dating back to the 19th century – the challenge for SMEs and scaleups was to demonstrate the value their IP and intangibles are actually delivering to the company.
The problem stemmed from two areas really. Unfamiliarity with IP as an asset class, and banking regulations, which encourage lenders to avoid it.
On the first point, even now, the training bankers go through includes the advice that they should ignore a company’s IP in any lending discussions as “too difficult.” In part, that’s because traditional accounting rules make home-grown IP and intangible largely invisible on the balance sheet. If they do appear, it’s as a sunk cost.
Only when a company buys IP is its value fixed – and even then, the buyer is required to put the acquisition cost on its balance sheet, and then amortise it (reduce the original value) every year until it supposedly reaches zero.
So, banks traditionally have simply not understood IP as an asset class, and have tended to focus on tangible assets instead, which historically have been much easier to get their heads round.
There are also issues of ‘due diligence,’ mainly around IP valuations. These haven’t been problematical for bigger IP-backed funding deals, because the companies involved will usually be able to afford highly complex, expensive and time-consuming valuations of their IP and intangibles, and perhaps also premiums to insure the IP being offered as collateral against any fall in value. Plus, the big accountancy and consultancy firms they use for these valuations will have multi-million-pound insurance of their own, just in case they make a mistake…
Added to that, is the second issue: that banking regulations favour tangible assets, and, at present, downgrade intangibles. Tangibles assets taken as collateral for lending can be used to offset capital requirements – the rules that say banks have to have a certain amount of capital available. But loans secured against tangible assets can’t be used to offset capital requirements.
So, these two factors have traditionally meant banks have been hesitant to embrace IP.
What’s changed in the use of IP as collateral?
Companies, particularly younger, technology-heavy ones, just don’t need tangible assets in the same way that the giants of the last century did. That means there is a shrinking supply of tangible assets for banks to take as security. With this decline in tangible assets on company balance sheets, banks are now compelled to explore alternative collateral, like IP and intangibles.
As a lender, if you can't get your hands on the kinds of tangible assets you are used to taking as collateral, then you really have to start looking more broadly at other things of value. And that’s where IP as an asset class is now becoming ever more important.
Misconceptions About IP
One of the biggest misconceptions surrounding IP is the belief that it is riskier than tangible assets. This simply isn’t true: well-managed IP can appreciate in value, making it a more reliable form of security. Inngot works with NatWest on its High Growth IP-backed loan (we helped them develop it, and we provide the IP valuations that support it). As part of the loan agreements, borrowers have to have the IP used as collateral revalued every year the loan runs for.
NatWest has just said that on average, IP taken as collateral has increased in value by 32% year on year. This figure highlights the potential of IP to be a strong security option for lenders.
What Makes IP Bankable?
For IP to be considered bankable, it must be revenue-generating. This means that the IP should be connected to cash flows that can service any potential loans. Lenders are now more aware of the scalability of IP and its direct correlation with a company’s growth potential.
If the business is generating revenue from the intellectual property assets, then it has customers who are willing to pay for the goods or services supported by this IP.
Legal and Market Developments
Recent legal advancements have also paved the way for IP financing. Changes in the laws governing what assets can be taken as security in a range of countries have made it easier for borrowers to get IP-backed loans, because it has made it easier for lenders to take security over relevant, cash generating, IP. The most obvious example of a country which has changed its laws to allow IP-backed finance is Scotland, where the Moveable Transactions Act can into force on April 1st, 2025.
As a result, NatWest is now launching a Scottish version of its High Growth IP backed loan; previously, this loan was only available in England and Wales.
Assessing IP Value
So, how do lenders assess IP today? There are several key factors: the separability of the IP assets from the business (can they easily be sold?), their saleability (would anyone want to buy them?), and their material value (what would they be worth if they had to be sold?). Lenders are increasingly looking for evidence of market traction and customer willingness to pay.
Where we are today
To conclude, the landscape of IP finance is transforming, with banks starting to recognise the value of intellectual property as a bankable asset. This shift is driven by a combination of market necessity, evolving perceptions, and legal developments. As companies continue to leverage their IP for growth, understanding how to navigate the lending landscape will be crucial for success.
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Inngot's online platform identifies all your intangible assets and demonstrates their value to lenders, investors, acquirers, licensees and stakeholders
Accreditations
Copyright © Inngot Limited 2019-2025. All rights reserved.
Inngot's online platform identifies all your intangible assets and demonstrates their value to lenders, investors, acquirers, licensees and stakeholders
Accreditations
Copyright © Inngot Limited 2019-2025. All rights reserved.
Inngot's online platform identifies all your intangible assets and demonstrates their value to lenders, investors, acquirers, licensees and stakeholders
Accreditations
Copyright © Inngot Limited 2019-2025. All rights reserved.
Inngot's online platform identifies all your intangible assets and demonstrates their value to lenders, investors, acquirers, licensees and stakeholders
Accreditations
Copyright © Inngot Limited 2019-2025. All rights reserved.