What advance rate applies to intangible assets?
Short Answer
There is no fixed rate. Intangible assets are valued case by case, with broad-market lending around 20–40% of appraised value and insurance-backed facilities reaching up to roughly 50%.
Full Explanation
Intangible assets do not carry a standard advance rate the way receivables or plant and equipment do. The percentage a lender will lend against your intellectual property is set case by case, driven by an independent valuation and by how readily the asset could be sold on default. As an indicative guide, broader-market lending against IP tends to fall around 20–40% of appraised value, while insurance-backed structures can reach up to roughly 50%. NatWest's High Growth IP Loan, for example, lends £250k–£10m at up to about 50% of appraised IP value, with the IP valued and revalued annually by an independent valuer. The advance rate is not read off a table — it is derived by applying three lender tests to an orderly-disposal value. Separability asks whether the asset can be sold or licensed apart from the business; saleability asks how readily it could be realised on default; and legal strength asks whether title is clean and enforceable. Registered rights such as patents, trade marks and registered designs carry more weight than unregistered know-how, because they are easier to identify, charge and transfer. A clean chain of title, IP kept in force through paid renewals, and clear encumbrance searches all support a higher rate; gaps push it down. Valuation to a lending standard follows IVS 210 and the RICS Red Book, using a conservative, orderly-liquidation premise rather than a going-concern figure. Valuers apply conservative inputs — a low-end royalty rate, a risk-adjusted discount rate, a finite economic life and cautious terminal value — and present ranges rather than a single 'most likely' number, so downside outcomes are visible to the credit team. This conservatism is precisely why intangible advance rates sit below those for tangible collateral. Because the figure hinges on evidence, the most useful step is to assemble a credit-ready pack before you apply: an independent IP valuation on a lending premise, proof of unencumbered title, and evidence of the revenue the IP underpins. Use Opagio's Intangible Asset Valuator to model a defensible value and see which factors most affect the rate a lender is likely to offer.
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