IP-Backed Lending

An intellectual property holding company — a legal entity established specifically to own, manage, and licence a group's intellectual property assets. IP Holdcos are used in lending structures to ring-fence IP from the operating company's other creditors and liabilities, creating a cleaner security package for lenders.

A form of lending in which the loan is secured against specific assets owned by the borrower, with the lender holding a security interest that allows them to seize and sell those assets in the event of default. Traditional asset-backed lending (ABL) uses tangible assets as collateral — commercial property, manufacturing equipment, inventory, and accounts receivable — and is a mature market with standardised frameworks, deep lender appetite, and LTV ratios typically ranging from 60% to 85%.

Non-physical assets pledged as security for a loan facility. Intangible collateral encompasses any intangible asset that a lender is willing to accept as part of the borrowing base, including registered intellectual property (patents, trademarks, registered designs), proprietary software with documented source code and escrow arrangements, contracted customer relationships with predictable revenue streams, brand equity supported by measurable licensing revenue or pricing premiums, and proprietary data assets with clear governance frameworks.

IP-backed insurance is a policy that guarantees a portion of the value or realisable proceeds of intellectual property used as loan collateral, allowing lenders to advance more against it than they otherwise would. By transferring some of the loss-given-default risk to an insurer, IP-backed insurance improves the credit profile of an otherwise illiquid, hard-to-realise asset, and this is why insurance-wrapped facilities can support materially higher loan-to-value ratios than unwrapped ones.

A licence-back is a licence granted by a lender back to a borrower that has assigned its intellectual property as security, permitting the borrower to continue using that IP in its business for the life of the loan. A licence-back arrangement is the practical companion to a legal mortgage or an assignment by way of security: the borrower transfers title to the lender as collateral, and the lender immediately licences the rights back so day-to-day operations, manufacturing and sales carry on uninterrupted.

Residual value insurance is a policy that guarantees a minimum future or realisable value for an asset, protecting a lender against the risk that the collateral is worth less than expected when it must be sold. Applied to intellectual property, residual value insurance underpins the downside of an appraised IP value, so that if the asset has to be realised on default the lender recovers at least an insured floor.

A structured finance technique in which a company's future revenue streams are packaged into a financial instrument that can be sold to investors or used as collateral for lending. In the context of intangible asset finance, revenue securitisation allows businesses to monetise predictable revenue generated by their intangible assets — software subscription income, licensing fees, franchise royalties, data access fees — without selling the underlying assets or diluting equity.

A sale-and-licence-back is a financing structure in which a business sells its intellectual property to a funder or special-purpose vehicle for cash, then immediately takes a licence back to keep using that IP in its operations. The sale and licence-back arrangement raises capital against otherwise illiquid intangible assets while leaving the business's day-to-day use of its brands, patents or technology undisturbed, because the licence-back grants continued rights of exploitation.

IP Finance in the UK: How to Borrow Against Intangible Assets in 2026

How IP-backed lending works in the UK — which assets qualify, valuation methods banks accept, typical loan terms, and how to prepare your application for IP finance.

What loan-to-value ratio do lenders offer on intellectual property?

Published UK bank terms cap IP loan-to-value at 50% of an independent valuation (orderly disposal value at the Royal Bank of Scotland). Other lenders set their own ratios, so confirm terms with the lender.

What is IP-backed insurance and does it help me borrow more?

IP-backed insurance guarantees a minimum recovery value on your intellectual property if you default, reducing the lender's loss given default. It can support a higher advance rate than uninsured IP.

Which sectors are best suited to IP-backed lending?

Sectors with registered, separable IP that generates attributable revenue suit IP-backed lending best: software, deep tech, life sciences, clean energy, media and consumer brands with licensable rights.