Non-Dilutive Funding

Royalty income lending is a financing structure in which a loan is advanced against, and serviced from, the licence royalties that an intellectual property asset generates. Royalty income lending is widely regarded as the cleanest form of IP-backed credit because it aligns repayment with a contractually defined, recurring cash stream rather than with the uncertain resale value of the underlying right.

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.

Cash-flow lending is a form of credit in which repayment is underwritten primarily against a borrower's forecast trading cash flows rather than the liquidation value of specific assets. In the context of IP-backed finance, cash flow lending is the dominant lens: operating cash flow is the primary repayment source and any charge over intellectual property is the secondary, fallback security.

An IP audit for lending is a structured, independent review of a business's intellectual property that establishes what rights it owns, whether title is clean and unencumbered, and whether those rights are enforceable and in force, so a lender can rely on them as collateral. An IP audit for lending is the evidentiary foundation on which any credit-standard IP valuation and security structure is built; without it, a lender cannot be confident that the assets it is advancing against genuinely belong to the borrower and are free of prior charges.

The chain of title for intellectual property is the documented, unbroken sequence of ownership records that traces an IP asset from its original creation through every transfer to its current owner. A clean chain of title ip is the first thing a lender verifies before lending against intellectual property, because it proves the borrower actually owns what it is offering as collateral and that the rights are unencumbered and enforceable.

Debt serviceability is a lender's assessment of whether a borrower's operating cash flow can meet the principal and interest payments on a loan as they fall due. In IP-backed lending, debt serviceability matters because collateral is only ever the secondary, fallback repayment source; the primary source is the cash the business generates from trading.

Debt subordination is an agreement under which one creditor's claim is ranked behind another's, so the senior lender is repaid in full before the subordinated lender receives anything. In IP-backed lending it is the mechanism that lets more than one lender share the same intangible collateral, or that reconciles a new IP-backed facility with existing security.

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.

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.

Can I get a loan on patents that are not yet generating revenue?

Rarely on their own. Mainstream lenders service debt from operating cash flow, so pre-revenue patents usually need attributable income, insurance backing, or another repayment source to support a loan.

How does a sale-and-licence-back of IP work?

In a sale-and-licence-back, a company sells its IP to a funder for cash, then immediately licences it back so it can keep using the IP in its business — releasing capital without losing operational use.

Can advisers earn referral fees for IP-backed lending?

Yes. Brokers, accountants and corporate-finance advisers can earn referral or arrangement fees for introducing clients to IP-backed lenders, though terms vary by lender and must be disclosed and FCA-compliant.