NatWest, one of the UK's leading high street banks, has recently launched a new lending proposition, which leverages Intellectual Property as collateral. This isn't a new concept, but its the first time I'm aware of this type of loan being offered by a high street bank, which will help bring it into the mainstream for smaller companies.
This is a type of loan loan which is similar to a mortgage; the bank holds a claim to the Intellectual Property concerned until the loan is repaid, in the same way that your home would be subject to a mortgage. This is useful for high-growth companies, who often have little in the way of physical assets but hold IP rights such as patents or trade marks, which themselves are valuable to the business.
Where this type of loan is granted, it will often (if not always) be a contractual requirement that the patent and/or trade mark register is updated to reflect that the bank holds a "security interest" against those rights. This prevents, for example, the transfer of those rights to a new owner without the consent of the bank, and so it is obviously in the IP owner's interest to settle the loan.
Small and growing businesses tend to choose well-known names when selecting a bank in their infancy, given the financial security that these established institutions offer. With NatWest's move into this area, I'm hopeful that more SMEs will become aware of, and be able to access, this type of funding.
With this new proposition, NatWest is recognising that IP is a vital component of value for growth companies that must be considered properly in lending decisions. Many entrepreneurs will welcome NatWest's emphasis on a business's intangibles, which have often gone ignored, rather than relying on personal or tangible assets.
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